The head of the Commodity Futures Trading Commission (CFTC), Rostin Behnam, has branded the present process for getting Proof of Work cryptocurrencies such as Bitcoin “skewed”.
While Bitcoin’s economic production was being eclipsed by its huge energy consumption, on May 18th, the top regulator made the point that Bitcoin’s mining methodology was neither environmentally benign nor sustainable.
It’s evident that there’s a big difference between the amount of time and effort required to mine these currencies and the amount of money they generate.” Over time, things may even out, but for now they’re definitely out of whack.” When questioned about cryptocurrencies in relation to environmental sustainability, Behnam, who is serving his first term as head of the CFTC, responded.
Due to the CFTC’s role in regulating derivatives markets in the United States, the agency has been seen as a main regulator of the new digital asset industry. Once Congress authorises legislation for the crypto business, the agency, along with the Securities and Exchange Commission (SEC), is expected to obtain explicit power to guide the regulatory environment for digital assets.
According to the regulator, it is time for Bitcoin developers to contemplate a transition from the Proof of Work (POW) consensus model to Proof of Stake (PoS).
In the mining sector, there are a number of people who are beginning to identify this problem and to consider alternative methods of mining. The words ‘proof-of-work’ and ‘proof-of-stake,’ which are just techniques of mining currencies, may be known to you. A lot of these programmers are beginning to work toward proof of stake since proof-of-work becomes more energy costly than proof-of-stake,” explained Behnam.
PoS might be forced on the digital asset market, in part, by compelling companies to publish how much energy each currency used. For example, this would aid investors in picking coins that have stronger environmental incentives, which would lead the industry toward PoS networks.
After telling CNBC two days earlier that the CFTC was “working diligently to put together legislative ideas” on digital assets in accordance with President Biden’s March Executive order, Behnam made his latest statement.
When discussing digital assets like commodities or securities, he said the two agencies were working with regulators to make the concept clear, citing the lack of agreement amongst them. According to the CFTC, cryptocurrencies such as Bitcoin, Ethereum, and others are commodities. However, the SEC has ruled that they are really securities.