An urgent call has been issued by a prominent former regulator, urging Congress to take immediate action, cautioning that continued inaction on cryptocurrency oversight places millions at risk amid widespread fraud and market instability.
Rostin Behnam, former chairman of the U.S. Commodity Futures Trading Commission (CFTC) and currently serving as a Distinguished Fellow at Georgetown University’s Psaros Center, delivered a forceful appeal during a joint congressional hearing on May 6, urging Congress to close what he described as a hazardous regulatory void in digital asset oversight. This gap pertains to the lack of federal regulation over digital assets that do not fall under the securities classification, thereby excluding much of the cryptocurrency spot market from the jurisdiction of both the CFTC and the U.S. Securities and Exchange Commission (SEC).
While testifying before the House Subcommittees on Digital Assets and Commodity Markets, Behnam reflected on his service as CFTC chair from 2021 to 2025. He emphasized that he repeatedly warned Congress about the existence of a legal vacuum throughout his tenure.
Throughout this time, I publicly repeated one consistent message to Congress: under current U.S. law, there is a gap in regulation for the nonsecurity digital asset market.
Behnam emphasized that the ongoing regulatory void has allowed extensive misconduct in the cryptocurrency sector, exposing investors to significant risk. He asserted that this gap still exists and requires targeted legislation, stating: “This regulatory absence has enabled numerous scandals and fraudulent actions—some minor and typical of criminal behavior, while others have been large-scale and highly visible.”
Former CFTC Chair Presses Congress for Immediate Action Amid Crypto Regulatory Void Threatening Millions
Referencing studies indicating that close to 20% of Americans currently hold digital assets, he contended that fragmented approaches and regulatory indecision have only intensified the risks confronting both retail and institutional participants. The former CFTC chair challenged the idea that implementing a U.S. regulatory structure would confer legitimacy upon bad actors, asserting that this reasoning has had the opposite outcome by allowing the majority of the market to remain without oversight.
Among the primary recommendations put forward by Behnam were the establishment of clear criteria to differentiate securities from commodities, the imposition of dual registration requirements on firms managing both asset types, and the creation of a streamlined disclosure framework suited to assets such as Bitcoin. He also advocated for the implementation of anti-money laundering protections, a fee-supported funding structure for the CFTC, and the incorporation of a self-regulatory organization to bolster enforcement capabilities.
Outlining a proposed path forward, Behnam urged lawmakers to enact legislation that clearly classifies digital assets as either commodities or securities, thereby ensuring regulatory clarity. He further recommended granting the CFTC new authority to oversee non-security tokens such as Bitcoin. He also presented additional principles, including customized disclosure requirements, dual-agency registration protocols, anti-money laundering obligations, and public education initiatives. Emphasizing the urgency, Behnam concluded with a strong call for immediate action.
We need to act thoughtfully, but with urgency, to fill this harmful regulatory gap in order to give American investors the protection they deserve.
