U.S. CFTC Chief Benham's Last Words to Crypto: Protect the Investors

Though U.S. Commodity Futures Trading Commission chief Rostin Behnam never managed to make it happen, the derivatives watchdog is likely to one day play a more prominent role in overseeing cryptocurrency trading, something he will "continue to advocate" for after he's gone.

Behnam, who will step down on January 20 to make way for President-elect Donald Trump's future appointee, said crypto "dominated every season of my tenure," according to what will be his last public remarks as chairman delivered on Wednesday at the Brookings Institution.

"Concerns regarding customer protections, increasing instances of fraud and market abuse, broader market resiliency, and even financial stability are intensifying in the absence of federal legislation," Behnam said. "We’ve seen this before in our history where we leave large swaths of finance outside of oversight and responsibility, and we have seen time and time again that it ends badly."

Addressing the "innovators" directly, he urged the protection of investors that "have demonstrated eagerness to incorporate digital asset products into their portfolios."

"Market regulators serve an essential role by ensuring financial innovations are socialized into a culture of regulation and compliance that protects consumers and provides legal certainty," he said, arguing that he never favored an enforcement-driven approach. In contrast, regulation-by-enforcement is the criticism the industry has long assigned to Behnam's counterpart on the securities side, Gary Gensler, the chairman of the Securities and Exchange Commission.

In an interview on Bloomberg TV on Wednesday, Gensler — who'll also step down on January 20 — reiterated his view that enforcement was a good way to deal with crypto businesses, and that he was following the lead of his Republican predecessor, Chair Jay Clayton.

"It's a field that built up around non-compliance, and I'm proud of what we've done, of building on what Chair Clayton and others have done previously," Gensler said. "I think there's still work to be done."

Behnam long maintained a contrast with Gensler on crypto issues, including a disagreement with the Gensler view that current laws are sufficient for the policing of the sector.

Trump has made his pick for replacing Gensler at the SEC, naming former SEC Commissioner Paul Atkins as the person he'll nominate. Though the CFTC may rise into a spot of higher authority over crypto trading than the SEC in the future, the incoming president hasn't yet named a successor for Behnam.