Ex-CFTC Chair Behnam Calls Self-Regulatory Organization ‘Critical’ to Market Regulation

A reliable self-regulatory organization (SRO) will be “critical” to the success of a regulatory framework for digital assets.

That’s according to former Commodity Futures Trading Commission (CFTC) Chairman Rostin Behnam, who was a speaker during the June 4 House Financial Services Committee hearing titled “American Innovation and the Future of Digital Assets: From Blueprint to a Functional Framework.”

Benham announced he was stepping down from the CFTC in January, two weeks before President Trump’s inauguration.

The hearing was supposed to focus on the terms of the recently introduced crypto market structure bill, the CLARITY Act of 2025, but ended up being dominated by Democrats and Republicans going head-to-head over President Trump’s controversial crypto enterprises.

Behnam’s focus, however, was not the president’s crypto ties, but what he called a “gap in regulation” for crypto assets that are not considered securities — something he has pointed out to Congress before.

Part of the solution, he argued, is a role for self-regulatory organizations for regulating crypto in the U.S. across agencies.

In his written comments to the committee, Behnam said “a reliable self-regulatory organization (‘SRO’) has been critical to the success of the CFTC and SEC for decades. […] Any effective legislative effort mandating a regulatory framework for digital assets must include a role for SROs.”

Self regulatory organizations often work with regulators, enforcing standards on members while being able to act more nimbly than government agencies can. The CFTC has the National Futures Association (NFA) and the Securities and Exchange Commission (SEC) has FINRA.

In both cases, the SRO has proven to be “​​effective partners for both agencies, complementing and supporting the missions of each,” Behnam wrote in his testimony.

The CFTC under Behnam was seen as more friendly to crypto — especially compared to the SEC under Chairman Gary Gensler — and many industry leaders and organizations called for the CFTC to be given primary regulatory authority over the crypto industry. The CLARITY Act would give the regulator much of that authority.

Renewing an Old Idea

The need for an SRO for digital asset regulation is a topic that incoming CFTC Chairman Brian Quintenz has advocated for in the past — as long ago as 2018 — seeing it as a potential placeholder for actual industry-specific legislation.

Last November, Quintenz commented on X that an SRO “is the best temporary solution without new legislation.” But, he pointed out, the CFTC is focused on overseeing commodity futures and derivatives markets, and doesn’t have the authority to regulate spot markets directly:

But the CLARITY Act — the broad crypto market regulation bill that was the intended subject of Wednesday’s hearing — would grant the CFTC that authority, actually giving an SRO teeth.

In his 2018 speech, Quintenz, who was then a CFTC Commissioner, said that while such an SRO could initially “establish best practices for spot platforms, including setting minimum standards of fitness for their employees,” its longer term activities would be more effective with crypto-specific legislation in place.

“Eventually, it could enforce rules on its own membership, supervise them for compliance, and provide a forum for customers to seek redress against member platforms, just like FINRA and NFA do for the securities and derivatives markets today,” he said.

Not everyone in crypto was amenable to the idea of an SRO in the past. When the now infamous Sam Bankman-Fried pushed the idea in 2022, he got stiff pushback from people who felt that an SRO would stifle the DeFi industry, as startups wouldn’t have the resources to meet an SRO’s standards.