At a meeting of the Commodity Futures Trading Commission’s (CFTC) Technology Advisory Committee (TAC), Commissioner Kristin N. Johnson hinted her support for the U.S. Congress’ efforts to introduce a package of digital asset regulation.
“Our regulation is incomplete,” said Johnson in her opening remarks to the second meeting of the TAC, an advisory committee under the CFTC created in 1999 to advise the regulator on complex issues at the intersection of technology, law, policy, and finance.
The July 18 meeting was scheduled to discuss regulatory issues around artificial intelligence (AI), cyber resilience for financial markets and, notably, decentralized finance (DeFi), including decentralized autonomous organizations (DAOs) and the CFTC’s Ooki DAO case.
Johnson began by praising the CFTC’s recent regulatory enforcement actions.
“Last week, the CFTC, SEC (Securities Exchange Commission), the Federal Trade Commission (FTC), and the Department of Justice (DOJ) introduced important litigation against Celsius Network and its Chief Executive Officer, Alex Mashinsky. Earlier this spring, the CFTC and SEC introduced actions against Binance.”
Earlier in July, investigators from the CFTC concluded that bankrupt digital asset lender Celsius and its former CEO, Mashinsky, broke U.S. rules before the firm filed for bankruptcy. This eventually resulted, on July 13, with the regulator charging Mashinsky and Celsius Network with fraud and material misrepresentations, specifically the false touting of high profits and security to induce customers to deposit their digital asset commodities on the platform.
These charges came the same day civil suits alleging similar misdeeds were filed against the bankrupt lender and its disgraced former CEO by the SEC and FTC, and a criminal fraud case was filed against Mashinsky by the DOJ.
The second action that Johnson mentioned was the civil suit that the CFTC filed against Binance in March, which accused the digital asset exchange of a “calculated, phased approach” to violate U.S. commodities regulations.
In each instance (Celsius and Binance), said Johnson, “the CFTC seeks to enforce existing regulations.”
Despite suggesting that existing regulation is working, to an extent, and is being enforced effectively, Johnson went on to say that “I am heartened that Congress is actively considering proposed legislation.”
Johnson also emphasized that “market conditions and recent developments demonstrate the necessity of continuing to vigilantly enforce our regulations.”
The recent developments that Johnson referred to are likely the various scandals and collapses of 2022, which are largely responsible for the increased intensity of lawmakers’ push for improved regulation. However, what those improvements look like is still very much contested in U.S. Congress.
At Tuesday’s meeting, the TAC also introduced the three subcommittees approved by the CFTC, namely the Digital Assets and Blockchain Technology Subcommittee, the Emerging and Evolving Technologies Subcommittee, and the Cybersecurity Subcommittee.
Watch: Blockchain regulation with Marcin Zarakowski
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