CFTC Commissioner Rostin Behnam Spoke At 2018 ISDA Annual Japan Conference About Crypto and Fintech
The 2018 ISDA Annual Japan Conference happened on Friday, October 26th in the Shangri-La Hotel in Tokyo. This event welcomed many different speakers, starting with the Welcoming Remarks from Scott O’Malia of ISDA. There were two keynote addresses to begin the day, one of which was Rostin Behnam, a commissioner with the U.S. Commodity Futures Trading Commission (CFTC).
Commissioner Behnam opened his keynote address with speaking about the goals of someone in his position, and how he’s been successful as a commissioner. For him, “success means that I have done my best to make sure that every interested party is working collectively to address the issues facing the markets today. It means moving beyond domestic political polarity and nationalistic animus to collaboratively address new and emerging risks with lessons learned from a decade of recovery and almost a century of history. Simply put, success means working together to manage the day-to-day risks in our markets and creating plans to manage and resolve uncertainties.”
Considering his perspective with these types of resolutions, it should come as no surprise that his speech included the pursuance of cross-border regulation. He elaborated on the efforts that Chairman J. Christopher Giancarlo has been making to establish a whitepaper on these interactions, which he called “an arrow outside of its bundle.” His comments about the actual solutions proposed were vague, but he commented that “it remains unclear as to how the Commission will approach the rulemaking process within our existing set of regulations.”
Speaking on cross-border regulation provided a natural segue into the discussion of fintech, though it was the last of the subjects that he spoke on. On his first full year as a commissioner with the CFTC, he said, “I am surprised by the amount of time I spent examining issues related to bitcoin, crypto assets, distributed ledger technology (DLT), artificial intelligence, and cloud-based programming.” He commented that he led a “listening tour,” during which time he met up with many authorities in this field to learn about both current and traditional technologies. With “no single goal in mind,” he simply wanted to learn more about the innovations of the fintech industry.
Even though he made sure to keep the comments minimal on this topic, he said,
“I believe that we as regulators must approach FinTech with an open mind and a healthy respect for our role in the markets. There is great regulatory uncertainty regarding how FinTech fits into our existing rules and regulations. Every innovator at the edges of what is permitted is hoping that his or her product will prove to be what is desired by the market and deemed compliant by the regulator. Everyone wants a clear statement of support for what they are doing, and yet, most cannot describe—or maybe haven’t even considered—the risks. And this is critical: if innovators want access to financial networks, we regulators, whose job it is to ensure fair, safe, and transparent markets, need to understand how their technologies work and the risks that they bring into the world’s markets.”
He wrapped up this part of his speech with speaking on the upcoming G20 Summit, which will be hosted in Japan in 2019, where he noted that fintech “is fundamentally reshaping the global economy in a positive way.” Going forward, the big challenge for the commissioners within the CFTC will be the risks and rewards, considered that the lack of “organizational structure of supervised firms.” However, he reassured attendees that regulators “have tools in their bundle that could serve as models for the future.”
Commissioner Behnam’s full remarks can be viewed at the government website for the CFTC.