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Biden’s election to lead the commodities regulator marks climate as a priority by Reuters

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© Reuters. Rostin Behnam testifies before a hearing of the Senate Agriculture, Food and Forestry Committee on his nomination for chairman of the Commodity Futures Trading Commission (CFTC) on Capitol Hill in Washington, the United States, Oct. 27, 2021. REUTERS / Elizabeth Fra

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By Chris Prentice and Pete Schroeder

WASHINGTON (Reuters) – The election of US President Joe Biden as head of the US Commodity Futures Trading Commission (CFTC) on Wednesday signaled that climate risk and the rapid adoption of digital currencies would be a top priority if confirmed in his role.

Rostin Behnam, Democratic Commissioner at the CFTC and acting chairman since 2017, presented his vision for the agency to the Senate Agriculture Committee.

Behnam praised the CFTC’s ongoing work in monitoring derivatives, noting that this corner of the financial markets “performed very well” during the hectic start of the COVID-19 pandemic in early 2020. He also said he would ensure an active enforcement program with the agency if the top job was given.

“I will prioritize policies that enliven a culture of compliance, reinforced by an enforcement program that eradicates fraud,” he said in his opening statement.

Behnam also said he would support any legislation Congress would consider to give the CFTC greater authority over digital currencies, arguing that the fast-growing market could benefit from clearer oversight.

“Given the size, scope and scale of this emerging market … I think having a primary cop on tact is vital,” he said.

Behnam has made climate issues a core part of his work at the CFTC. In March, he set up a climate risk unit dedicated to better understanding and pricing climate-related risks in the derivatives markets. He also endorsed a 2020 report by the CFTC’s industry advisors, which identified climate change as a significant risk to the financial system.

On Wednesday, he said monitoring climate risk in financial markets is important. He said climate change is not yet a systemic risk to the financial system, but could occur with worse and more frequent severe weather events in the future.

However, he added that derivatives could play a “key role” in any market-based policy to address the problem.

Behnam’s nomination comes at a time when the CFTC is scarce.

In October, Democratic Commissioner Daniel Berkovitz resigned, leaving the agency politically frozen with only two active commissioners – Behnam and Republican Commissioner Dawn Stump. Biden has also nominated law professor Kristin Johnson as a Democratic member, but she has not yet been confirmed.

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