Urgent Plea From Former Top Regulator Presses Congress to Act Now, Warning That Inaction on Crypto Oversight Endangers Millions

An urgent plea from a top former regulator has reached Congress, warning that the window for needed crypto oversight is rapidly closing, and the consequences of further inaction will endanger millions amid rampant fraud and market disorder.

At a joint congressional hearing on Wednesday, former Commodity Futures Trading Commission (CFTC) Chair Rostin Behnam, now a Distinguished Fellow at Georgetown University’s Psaros Center, pressed lawmakers to close a dangerous regulatory gap in the supervision of digital assets. This gap, referring to the lack of federal oversight for digital assets not classified as securities, leaves a large portion of the cryptocurrency spot market outside the regulatory purview of both the CFTC and the U.S. Securities and Echange Commission (SEC).

Testifying before the House Subcommittees on Digital Assets and Commodity Markets, Behnam, who chaired the CFTC from 2021 to 2025, further recounted how during his time in office, he consistently alerted Congress to this pressing legal void.

“Throughout this time, I publicly repeated one consistent message to Congress: under current U.S. law, there is a gap in regulation for the nonsecurity digital asset market,” Behnam stated.

This persistent gap, according to Behnam, has facilitated a vast amount of misconduct in the crypto space, exposing investors to avoidable risk.

“The regulatory gap remains today, and must be filled with targeted legislation; it has facilitated countless scandals and fraudulent activity, some very small and typical in criminal form, others massive in profile,” he asserted.

Noting that recent research indicates nearly 20% of Americans now own digital assets, Behnaam highlighted how piecemeal approaches and regulatory foot-dragging have only deepened the vulnerabilities facing retail and institutional participants alike.

Behnamn also countered the argument that establishing a U.S. regulatory framework would serve to legitimize illegitimate actors, suggesting this logic has had the reverse effect by leaving the majority of the market unregulated.

Among his key suggestions, Behnaam called for clear rules distinguishing securities from commodities, dual registration requirements for firms handling both, and a limited disclosure regime tailored to assets like bitcoin. He also highlighted the need for anti-money laundering safeguards, a fee-based funding model for the CFTC, and inclusion of a self-regulatory organization to strengthen enforcement.

suggesting a path forward, Behnaam urged lawmakers to implement legislation that distinguishes digital assets as either commodities or securities, thereby clarifying regulatory jurisdiction. He also advocated for new CFTC authority to supervise non-security tokens like bitcoin, and outlined principles such as tailored disclosures, dual-agency registration, anti-money laundering mandates, and public education initiatives.

“We need to act thoughtfully, but with urgency, to fill this harmful regulatory gap in order to give American investors the protection they deserve,” Behnaam concluded.