Another expected resignation of a cabinet member from Biden’s era was announced today. CFTC Chairman Rostin behnam plans to step down as Chair on Inauguration and will leave the Agency in full early in February.
Behnam was a Democrat, nominated in 2017 by Donald Trump for the commission. He took over as acting chair when President Joe Biden assumed office. Later, in December of 2021, he was confirmed by the Senate.
Trump will likely name Caroline Pham, or Summer Mersinger as the acting chairman of the Republican Commission later in this month. The president may choose to nominate a different candidate, or not.
Reuters reports that Jill Sommers, a consultant with Potomak Global Partners, and Josh Sterling of Milbank are on the shortlist for head of the derivatives regulator.
A person with knowledge of the situation told Blockworks that Brian Quintenz, former CFTC commissioner and head policy at a16z Crypto is being considered. Quintenz held the position of commissioner on the CFTC from 2017 through 2021.
The CFTC was long a smaller player on the regulatory landscape of financial services, but in recent years it has played a bigger role in cryptocurrency regulations. The FIT21 legislation, which passed Congress in the past year, was a bipartisan effort to increase the CFTC’s oversight of crypto markets.
Behnam himself advocated more CFTC authorities, especially in light of the fact that the agency, as it stands currently, does not have explicit or comprehensive authority over cryptocurrency derivatives markets.
“The evidence is in our enforcement record, and we even point to the SEC’s enforcement record as well,” Behnam told a Congressional committee in 2023. “We brought 82 cases over about eight years, and [these] 82 cases [came from] an agency that doesn’t have regulatory authority.”
The CFTC, however, was part of Binance’s 2023 Settlement Agreement, which led to a payment in excess of $4 billion. This is one of the biggest corporate penalties of all time.
“Binance’s activities undermined the foundation of safe and sound financial markets by intentionally avoiding basic, fundamental obligations that apply to exchanges, all the while collecting approximately $1.35 billion in trading fees from US customers,” Behnam made the following statement when the announcement of the settlement was first released.
Pham and Mersinger — both known for their engagement with the crypto industry in recent years — have dissented from other commissioners regarding crypto enforcement actions. The two commissioners issued a statement in September against the CFTC’s $175,000 settlement agreement with Uniswap over an alleged illegal trading offer.
Mersinger claimed the case against Uniswap was a sham. “has all the hallmarks of what we have come to know as regulation through enforcement.”
Pham noted, according to her, that the agency seemed to treat crypto actors in a way they wouldn’t apply to any other industry.
“Applying the logic of the CFTC’s legal argument, it seems that any commercial transaction to purchase a cow, a bushel of oats or a barrel of oil that involves the word ‘financed’ and is delivered in 30 days is a violation of [commodities laws] and needs to be executed on a futures exchange,” Pham writes. “I am skeptical that the CFTC would try to enforce these statutory provisions outside of DeFi.”
Our request for a comment from the Trump Transition Team on Behnam’s resignation was not responded to immediately.
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