Rostin Behnam, Chairman of the Commodity Futures Trading Commission (CFTC), seems to want to use its possible future position as the watchdog of the Bitcoin market to encourage the reduction of the energy use of the peer-to-peer (P2P) currency and encourage consumers to find it less energy-intensive. alternatives.
If the Lummis-Gillibrand landmark legislation is approved, the regulatory agency will oversee Bitcoin. The bill presented yesterday must pass four committees in the Senate before it can be put to a vote on the Senate floor.
“In terms of the relationship between the current use case [of cryptocurrencies] and the energy consumption from mining, I think there is quite a significant deviation right now; and we need to remove this dislocation,” said Behnam live interview with Washington post Wednesday.
Bitcoin’s energy consumption has been fiercely debated since last year, when Tesla stopped accepting payments in BTC for its electric vehicles a few months after activating the option. The automaker’s CEO, Elon Musk, tweeted that the decision was driven by sustainability concerns regarding bitcoin mining and its associated emissions.
Behnam hinted at two ways the regulator might explore suing for a different Bitcoin if it gets the extra authorizations provided under Lummis-Gillibrand: backbone technology and consumer behavior.
“On the one hand, we need the industry to transition and change and understand that energy consumption is huge, but we need consumers to understand and appreciate what is at stake so that they can shift their choices away from more energy through economic incentives. “consumer behavior,” he said.
Lummis-Gillibrand, also called the Responsible Financial Innovation Act, gives the CFTC exclusive jurisdiction over the spot markets of digital currencies classified as commodities, which will be the majority of coins available, including Bitcoin in the current text.
As a result, bitcoin exchanges will need to register with the CFTC to provide the services they offer to US consumers today, as well as follow certain regulatory guidelines in areas such as custody, customer protection, prevention of market manipulation and information. to share.
According to Behnam’s claims, the CFTC could use its regulatory umbrella over exchanges to create “a stream of information” for consumers on a myriad of issues related to cryptocurrencies, including energy use.
“And that is, if we create the flow of information, incentives and deterrents will move the market in the right direction, and given the climate crisis and climate change issues, this is kind of an age-old theory, I think true and accurate explanations, incentives will steer people away from this energy-consuming behavior.”
Climate Change: A Personal History
Behman has been personally involved in advocacy on climate change-related issues in the context of financial markets in the past.
Before being elected chairman in January 2021, Behman served as commissioner at the CFTC since September 2017 – during which time he led the climate-related market risk subcommittee of the market risk advisory committee (MRAC).
The efforts of the subcommittee culminated in the publication of the report “Managing Climate Risk in the US Financial System” in September 2020.
“The key message of this report is that US financial regulators recognize that climate change poses serious emerging risks to the US financial system, and they must act urgently and decisively to measure, understand and address these risks,” the report’s executive summary states. .
The report makes policy recommendations on climate change in the United States, including setting the carbon price, which it says is “the single most important step to manage climate risk and ensure that capital is appropriately allocated.” Other recommendations include principles for developing rules on climate risk disclosures, such as being “specific and complete” and “comparable across companies within a sector, industry or portfolio” to inform investor decision.
“Effective and well-functioning markets must efficiently allocate capital to net-zero-emission investments, foster innovation, and create and maintain quality jobs in a growing net-zero economy,” the report says. “These recommendations aim to achieve these goals by improving the functioning of markets by reducing structural barriers and accelerating private sector innovation.”
Considering Behnam’s comments during the interview, it seems that the head of the CFTC is interested in cryptocurrency and blockchain but lacks basic knowledge of Bitcoin.
Not only is Bitcoin’s innovation arguably proof-of-work (PoW), but a change to proof-of-stake (PoS), which is considered a “greener” alternative, could weaken many of the properties of a P2P currency.
While it is unclear whether Behnam will follow through on his comments and promote changes on the technological and consumer behavior front, the community should remain vigilant and, above all, be active in educating regulators, legislators and industry players on the benefits of Bitcoin. and the context in which energy use needs to be examined.