Regulatory Veteran Sounds Alarm on Crypto Risks

Former CFTC Chair Rostin Behnam warned lawmakers that unchecked cryptocurrency markets could foster conflicts of interest and market manipulation during Tuesday's Senate Banking subcommittee hearing. The testimony came as legislators consider establishing the first comprehensive U.S. framework for digital asset markets.

Growing Urgency for Regulatory Clarity

Behnam's prepared statement emphasized that 【regulatory gaps】 in crypto oversight create systemic risks, noting: "Inaction will only result in greater risk through lack of market transparency and conflicts of interest." The hearing coincides with House deliberations on the CLARITY Act, which cleared committee review last month.

——The digital asset market continues weaving itself into traditional finance, raising concerns about broader market resiliency—— Behnam cautioned in his testimony.

Legislative Push for Market Structure

Subcommittee Chair Cynthia Lummis (R-WY) framed the hearing as critical for U.S. competitiveness, contrasting American regulatory uncertainty with established frameworks in the EU and Singapore. The proposed legislation seeks to:

- Define digital assets' legal status

- Distribute oversight among multiple regulators

- Enhance investor protections

Political Divisions Emerge

While some Democrats joined Republicans in recently passing the GENIUS stablecoin bill, Senator Elizabeth Warren (D-MA) continues raising concerns about political ties to crypto firms. Notably, Warren has scrutinized former President Trump's connections to stablecoin issuer World Liberty Financial.

The hearing featured testimony from Coinbase and Multicoin Capital representatives alongside Behnam, marking Congress' latest effort to address cryptocurrency's regulatory gray area. As of Wednesday morning, no timeline had been set for committee votes on proposed legislation.