Perry World House and the Wharton School recently co-sponsored the first edition of this year’s series, “The World Today,” a weekly discussion that surveys some of the globe’s most pressing current events. Held on Sept. 6 virtually and at Perry World House, the hybrid discussion was moderated by Sarah Hammer, managing director of Wharton’s Stevens Center for Innovation in Finance, and Rostin Behnam, chairman of the U.S. Commodity Futures Trading Commission (CFTC).
“We are here to learn, and we are excited to launch our academic year with this incredibly important event,” Hammer said. “On behalf of all of us at Wharton and the Stevens Center for Innovation in Finance, it’s a thrill to be here today, with all that is happening in the world, in financial services, and in financial innovation.”
Both Hammer and Behnam talked about digital assets, and specifically how nations need to manage the economic and other risks created by the digital boom, as well as how countries must determine how best to protect consumers, assure economic stability, preserve national security, and mitigate climate risks, all while navigating the new financial space. Touching on cryptocurrencies, the panelists noted digital assets exceeded $3 trillion in total market value in November 2021, then fell significantly in the crypto crash of 2022. These new financial instruments and mechanisms, Behnam said, present countries with opportunities to reassert or establish their global financial leadership.
Hammer and Behnam also discussed what countries can do to protect and expand their interests in this rapidly evolving landscape. Are digital currencies and central banks the future of finance? How will the global financial architecture change? And how should this new sector be regulated?
Hammer pressed Behnam on how the Commission is working to keep markets safe amidst the rapid pace of digital asset markets. “There are some events taking place that will lead to some changes that we’ll all be studying tonight and tomorrow. But certainly, there are a lot of players and a lot of voices to listen to,” Behnam said. “It feels like an oversimplification to say that the regulatory framework on this issue is incredibly complex, and we have some work and some thinking to do and listening to do around that.
“We have direct oversight, direct authority to regulate derivative contracts,” he continued. “This could be anything from agriculture [to] energy or digital assets. Congress was very thoughtful to give us authority over conduct that included fraud or manipulation. So anti-fraud or anti-manipulation, authority in cash markets. So, you can imagine if two counterparties [are] selling grain to each other, we do not regulate that exchange, between those two counterparties. That contract, however, large or small, the pricing of that will be reflected in the future’s price, which is what we do directly oversee. Congress provided us authority to oversee that cash transaction if there is fraud or manipulation.”
Behnam also talked about his trajectory to his current role from growing up in northern New Jersey, practicing law, and making his way down to Washington, D.C, and working for the U.S. Senate.
“Our markets were agriculturally based,” he says. “We [the CFTC] were a part of the [United States Department of Agriculture] up until about 50 years ago, and part of my responsibility and in addition to dealing with the financial services issue, was learning about agricultural policy. So, a kid from northern New Jersey, really didn’t know much at all about agricultural policy.”
He began traveling the country, talking to farmers, ranchers, and thinking about farm policy and appreciating how food gets on tables. “The challenges that growers, producers have, the inputs, which we’re seeing now with fertilizer prices, machinery, and the cost of financing goods—it gave me a different perspective.”
Behnam said he sees his role as the chairman of the U.S. Commodity Futures Trading Commission as a public service and said that the number one attribute that a public service individual should have is listening.
“We all have natural biases,” he explained. “We all have learned biases from where we’re from and what we learned from what we’ve done professionally. But we have this responsibility in the public service space to listen, because we all have different vested interests, whether it’s business or personal, we all come from different parts of the world. And we have different experiences and in financial markets where there are so many inputs and so many different perspectives as with any other discipline, we have to listen. We have to overcome those biases and understand that we have a responsibility to fulfill a mission, to protect individuals and customers and to ensure markets are functioning.”