[Senate Hearing 119-99]
[From the U.S. Government Publishing Office]
S. Hrg. 119-99
NOMINATION OF THE HONORABLE BRIAN
QUINTENZ, TO BE CHAIRMAN AND A COMMIS-
SIONER OF THE COMMODITY FUTURES TRAD-
ING COMMISSION
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HEARING
BEFORE THE
COMMITTEE ON AGRICULTURE,
NUTRITION, AND FORESTRY
UNITED STATES SENATE
ONE HUNDRED NINETEENTH CONGRESS
FIRST SESSION
__________
June 10, 2025
__________
Printed for the use of the
Committee on Agriculture, Nutrition, and Forestry
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available on http://www.govinfo.gov/
__________
U.S. GOVERNMENT PUBLISHING OFFICE
60-686 PDF WASHINGTON : 2025
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COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY
JOHN BOOZMAN, Arkansas, Chairman
MITCH McCONNELL, Kentucky AMY KLOBUCHAR, Minnesota
JOHN HOEVEN, North Dakota MICHAEL F. BENNET, Colorado
JONI ERNST, Iowa TINA SMITH, Minnesota
CINDY HYDE-SMITH, Mississippi RICHARD J. DURBIN, Illinois
ROGER MARSHALL, Kansas CORY BOOKER, New Jersey
TOMMY TUBERVILLE, Alabama BEN RAY LUJAN, New Mexico
JAMES C. JUSTICE, West Virginia RAPHAEL WARNOCK, Georgia
CHARLES GRASSLEY, Iowa PETER WELCH, Vermont
JOHN THUNE, South Dakota JOHN FETTERMAN, Pennsylvania
DEB FISCHER, Nebraska ADAM SCHIFF, California
JERRY MORAN, Kansas ELISSA SLOTKIN, Michigan
Fitzhugh Elder IV, Majority Staff Director
Jessica L. Williams, Chief Clerk
Lauren Santabar, Minority Staff Director
Chu-Yuan Hwang, Minority Chief Counsel
C O N T E N T S
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Tuesday, June 10, 2025
Page
Hearing:
Nomination of The Honorable Brian Quintenz, of Ohio, to be
Chairman and a Commissioner of the Commodity Futures Trading
Commission..................................................... 1
----------
STATEMENTS PRESENTED BY SENATORS
Boozman, Hon. John, U.S. Senator from the State of Arkansas...... 1
Klobuchar, Hon. Amy, U.S. Senator from the State of Minnesota.... 2
WITNESS
The Honorable Brian Quintenz, of Ohio, to be Chairman and a
Commissioner of the Commodity Futures Trading Commission....... 4
----------
APPENDIX
Prepared Statements:
Quintenz, Brian.............................................. 28
Document(s) Submitted for the Record:
Tuberville, Hon. Tommy:
Letter from UBS Financial Services Inc....................... 32
Boozman, Hon. John:
Agriculture Group in support of Brian Quintenz, letter of
support.................................................... 33
Crypto Council for Innovation, letter of support............. 35
Foreign Exchange Professionals Association, letter of support 37
Symphony Communications Services, LLC, letter of support..... 39
Wholesale Markets Brokers' Association, letter of support.... 40
Quintenz, Brian:
Committee questionnaire, Office of Government Ethics
Executive Branch Personnel Public Financial Disclosure
Report and 5-day letter filed by Brian Quintenz............ 41
Question and Answer:
Quintenz, Brian:
Written response to questions from Hon. Amy Klobuchar........ 78
Written response to questions from Hon. Mitch McConnell...... 79
Written response to questions from Hon. Michael Bennet....... 80
Written response to questions from Hon. Peter Welch.......... 83
Written response to questions from Hon. John Fetterman....... 84
Written response to questions from Hon. Elissa Slotkin....... 87
NOMINATION OF THE HONORABLE BRIAN QUINTENZ, TO BE CHAIRMAN AND A
COMMISSIONER OF THE COMMODITY FUTURES TRADING COMMISSION
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TUESDAY, JUNE 10, 2025
U.S. Senate
Committee on Agriculture, Nutrition, and Forestry
Washington, DC.
The Committee met, pursuant to notice, at 3:08 p.m., in
Room 106, Dirksen Senate Office Building, Hon. John Boozman,
Chairman of the Committee, presiding.
Present: Senators Boozman [presiding], Hoeven, Ernst, Hyde-
Smith, Marshall, Tuberville, Justice, Klobuchar, Bennet, Smith,
Durbin, Booker, Lujan, Warnock, Fetterman, and Schiff.
STATEMENT OF HON. BOOZMAN, U.S. SENATOR FROM THE STATE OF
ARKANSAS, CHAIRMAN, U.S. COMMITTEE ON AGRICULTURE, NUTRITION,
AND FORESTRY
Chairman Boozman. Good afternoon. It is my privilege to
call this hearing to order. I thank my colleagues for joining
us today. We will be considering the nomination of Mr. Brian
Quintenz to be Chairman of the Commodities Futures Trading
Commission.
Mr. Quintenz, congratulations on your nomination. We
appreciate your willingness to serve. Also, throw in your
family's willingness to let you serve. These are certainly
family affairs.
The CFTC is the only federal financial regulator that
oversees agriculture and energy risk management markets, and
the resiliency of the derivative markets are critical to our
commodity supply chains. Well-regulated and efficient commodity
markets help our producers manage risk. As our farmers face
elevated input cost, interest rate uncertainty, price
volatility, natural disasters, futures markets help producers
protect themselves.
Over the years, the CFTC's pragmatic, principles-based
approach has resulted in a workable regulatory framework for
markets to function efficiently. The CFTC has historically
engaged in constructive dialog with regulated entities and
market participants, and this has built trust and confidence in
the CFTC. This constructive, flexible regulatory approach,
combined with diligent policing of the cash and derivative
commodity markets has resulted in the U.S. derivative markets
being the envy of the world. It is my expectation that the
Commissioners entrusted with leading the agency will continue
these practices that have served our country so well.
At the same point, the role of the CFTC may expand as
Congress, including this Committee, considers granting the CFTC
authority to regulate the spot digital commodity markets.
Additionally, new markets and products such as prediction
markets and crypto-based derivatives have been developed, which
will require the Commission's attention.
As I have said before, the CFTC is the right agency to
regulate spot digital commodity trading. The CFTC and only the
CFTC should regulate the trading of digital commodities. It is
because only the CFTC understands the unique characteristics of
commodities and commodity-based contracts. The market
knowledge, combined with its flexible, constructive regulatory
approach is why it is the right regulator for spot digital
commodity markets.
I look forward to hearing from Mr. Quintenz on these
issues. Again, congratulations on your nomination.
I now turn to Senator Klobuchar.
STATEMENT OF HON. KLOBUCHAR, U.S. SENATOR FROM THE STATE OF
MINNESOTA
Senator Klobuchar. Well, thank you very much, Mr. Chair. I
know we will be joined by several other Members. There are
already a number here.
Thank you, Mr. Quintenz, for being with us today. I would
also like to welcome your family, including your parents, Ken
and Susan. I see them over there--and they seem proud of you, I
do not know, just so you know--your kids, Connor and Vivienne,
as well as Jenna, so thank you all for being here.
The Commodity Futures Trading Commission plays a vital role
in ensuring the integrity of our financial and agricultural
markets. That includes protecting market participants from
fraud and manipulation; maintaining orderly derivative markets;
and enabling farmers, ranchers, manufacturers, and small
businesses to hedge against risk.
We meet at a pivotal moment for the CFTC as it faces a
rapidly changing landscape across both derivatives and spot
markets. The agency is being called on to address not only the
emergence of novel financial products and technologies, but
also broader shifts in market structure, including the growing
influence of non-traditional platforms, as well as changes to
established platforms. These developments raise important
issues and important questions about the scope of the CFTC's
oversight and its ability to respond quickly and effectively to
risk in complex and fast-moving markets.
To tackle these challenges head-on, I believe it is in the
public interest that the CFTC have not only a confirmed
Chairman, but also a fully functioning Commission with the
bipartisan balance and independent structure that Congress
intended. I cannot think of a more important time that we make
sure that happens.
It is also essential that the CFTC have the institutional
capacity, both in staffing and resources, to fulfill its
mandate in the face of these emerging challenges. That means
protecting retail investors and other market participants, as I
noted, from fraud and abuse, guarding against systemic risk,
and ensuring transparent competitive markets. At the same time,
the CFTC must foster a regulatory environment that encourages
responsible innovation and adapts to new technologies without
compromising its core responsibilities.
Mr. Quintenz, you bring valuable experience to this
nomination. You served as a CFTC Commissioner from 2017 to
2021, helping to steer the agency through major market stress,
including the WTI crude oil collapse and the early pandemic
volatility. You also led the agency's Technology Advisory
Committee and worked on policy issues at the intersection of
fintech and market regulation. You also have private sector
experience and, of course, we will be interested in recusal
issues for things that may be coming before the Commission.
The next Chair faces a full agenda, from disinter mediation
and digital asset oversight to improving transparency in
Treasury futures and protecting retail customers in the wake of
recent failures. You and I have discussed several priorities
directly tied to the CFTC's core mission: safeguarding rural
co-ops and end users, strengthening coordination with other
regulators, and modernizing surveillance tools to better detect
market abuse before it harms consumers. I look forward to
hearing more from you about how you plan to pursue these policy
goals.
Thank you again for being here, and we look forward to the
discussion. Thanks.
Chairman Boozman. It gives me great pleasure today to
introduce the President's nominee to serve as Chairman of the
Commodity Futures Trading Commission, Mr. Brian Quintenz. I
would like to welcome his family who has joined us today, his
parents, Ken and Susan; children, Connor and Vivienne; and
partner, Jenna. We are delighted to have you all with us today.
Mr. Quintenz brings considerable experience and
understanding to the CFTC that will serve him well as Chairman.
During the first Trump Administration, Mr. Quintenz served as
Commissioner of the CFTC after being unanimously confirmed by
the Senate in 2017. Mr. Quintenz has worked in the financial
markets and served as a thought leader on emerging markets and
innovative technology regulatory issues and began his career as
policy advisor for Congresswoman Deborah Pryce. Mr. Quintenz is
a graduate of Duke University and received his Master's of
Business Administration from Georgetown University.
Again, thank you for being here. I now should administer
the oath, and then you will be able to begin your testimony
where you will have five minutes. Please stand, raise your
right hand.
Chairman Boozman. Do you swear or affirm that the
statements you are about to provide is the truth, the whole
truth, and nothing but the truth, so help you God?
Mr. Quintenz. I do.
Chairman Boozman. Do you agree that if confirmed, you will
respond to requests to appear and testify before any duly
constituted Committee of the Senate?
Mr. Quintenz. I will.
Chairman Boozman. Thank you, and you are now recognized for
your statement.
STATEMENT OF HON. BRIAN QUINTENZ, OF OHIO, TO BE CHAIRMAN AND A
COMMISSIONER OF THE COMMODITY FUTURES TRADING COMMISSION
Mr. Quintenz. Thank you, Chairman Boozman. Thank you,
Ranking Member Klobuchar and Members of this Committee. It is a
true honor and privilege to be before you today as President
Trump's nominee to chair the Commodity Futures Trading
Commission, an agency that is near and dear to my heart.
I would first like to recognize my family, my parents, Ken
and Susan; my children, Connor and Vivienne; my niece, Claire;
and my girlfriend, Jenna; as well as many friends and
colleagues who are here with me today. I would like to dedicate
my testimony to my late twin brother, Darren, and my friend,
Mike Gill, who served at the agency with me.
I am deeply grateful to the President for the trust he has
placed in me to lead an agency that is vital and critical to
ensuring the resiliency and vibrancy of the United States
economy.
As a nation, I believe we are at the precipice of a golden
age for innovation, for our derivatives markets, and for the
CFTC itself. This could prove to be the most exciting time in
the agency's history, as well as its most important. If I have
the honor of being confirmed, I look forward to working with
the Members of this Committee and your staffs, Members of the
House Agriculture Committee, market participants and
stakeholders, especially in the agricultural space, to ensure
that CFTC-regulated markets remain the most innovative, liquid,
and resilient hedging and price discovery markets on the
planet.
This is the third time I have had the privilege of
appearing before this Committee as a nominee. The first two
were for my original appointment as a CFTC Commissioner, and on
both prior occasions, I was honored to receive unanimous
approval from this Committee and ultimately to have been
unanimously confirmed by the full Senate in 2017.
When I was last before this Committee, I pledged to visit
farmers and ranchers, producers, and growers at their farms and
places of business. When I was a Commissioner, I traveled to
over a dozen states across the country, including to Arkansas
and Minnesota, to hear about our agriculture industry's use of,
access to, and concerns with derivatives markets. I again
pledge if I have the honor of being confirmed to continue to
visit farmers and ranchers across the country, as well as adopt
the longstanding practice of the CFTC Chair sponsoring the
Agriculture Advisory Committee.
I am proud of the record that I established as
Commissioner, where I focused on three main objectives, risk,
innovation, and harmonization. Should I have the honor of being
confirmed to lead the CFTC, I pledge to continue the agency's
strong focus on risk innovation, as well as reciprocity with
foreign jurisdictions. Further, I will have no tolerance for
bad actors who do fraud, manipulate, or cheat in the CFTC's
markets. Customer protection has always been a key attribute of
well-regulated markets.
The CFTC is a systemic risk regulator and oversees perhaps
the world's most systemically important financial entities,
derivatives clearinghouses. First and foremost, the agency must
remain laser-focused on meeting its systemic regulatory
mandate. In my experience, the CFTC is both the world's most
innovative financial regulator, as well as its most
technologically advanced. This is because of the Commodity
Exchange Act, which is by far the world's most innovation-
focused statute. The CEA's principles-based approach to
regulation and self-certification framework has created a
marketplace that continues to thrive with integrity, while
providing individual small businesses and large firms with new
hedging tools to better manage their financial, commercial, and
economic risk.
Most recently, I served as the Global Head of Policy for
a16z Crypto, the crypto funds of venture capital firm
Andreessen Horowitz. This experience has provided me with three
invaluable insights to bring to bear should I have the honor of
being confirmed. First, I have traveled the world meeting with
other jurisdictions, regulators, and government officials,
where I learned what they have attempted to do, what they have
left to do, what has worked well or poorly in creating
regulatory frameworks for crypto assets and intermediaries.
Second, I have had a direct line of sight into the future
of this technology and how it could transform our lives. I view
blockchain as a horizontal technology that has the potential to
touch every aspect of society, not just as a vertical
technology purely focused on financial services.
Last, I have strong conviction that the surest way to
undermine U.S. global leadership in blockchain technology is to
let bad actors and fraudsters proliferate.
I began my career here on Capitol Hill working for--working
as a legislative aide in the House of Representatives for 6\1/
2\ years. I have a deep respect for Congress. Should I have the
honor of being confirmed, I will seek to be a trusted partner
to you in your oversight responsibilities so that the U.S.
derivatives markets remain the best in the world.
Thank you for your consideration of my nomination. I look
forward to answering your questions.
[The prepared statement of Mr. Quintenz can be found on
page 28 in the appendix.]
Senator Klobuchar. [Presiding.] Okay. Thank you. Senator
Boozman is going to be off to a meeting soon, so I am starting.
The fast-paced innovation in the crypto space has led to an
ever-growing number of retail investors and consumers using
crypto. We all know that. While it is important to encourage
innovation, I want to make sure crypto oversight is robust, so
people are protected.
Mr. Quintenz, what specific regulatory tools or approaches
would you use to ensure that innovation in cryptocurrency does
not come at the expense of basic safeguards and customer
protections for the public?
Mr. Quintenz. Thank you, Ranking Member. First, let me say
I appreciate the time that we spent in your office and
recalling my trips to Minnesota and would pledge to continue to
do that, and I really enjoyed myself there.
Your question is a very important one. Obviously, the
mission of the agency is critical. The agency oversees markets
that touch every segment of society and the economy from the
energy sector to the agricultural sector to the financial
services sector. We cannot take our eye off the ball there.
Should the agency receive new oversight responsibilities
through Congress, I believe that the agency can take a
technology-first approach to that oversight where we can look
to ensure that the most up-to-date technologies are used so
that we can spend taxpayer dollars efficiently and effectively.
Any new additional headcount that the agency decides to commit
to that oversight is a 10X employee compared to what they
otherwise would be without that technology. As I said, this is
the most technologically advanced regulator on the planet for
its traditional remit, and there is no reason it cannot be the
same for crypto.
Senator Klobuchar. Do you think you would need additional
funding and staff to write rules that would come out of any
legislation?
Mr. Quintenz. I think it would be a challenge to----
Senator Klobuchar. Not to mention oversight.
Mr. Quintenz. It would be a challenge to undertake a lot of
that responsibility, certainly the oversight part once rules
come online. I think that the rule-writing groups within the
agency are smaller, but once rules come online, then there is
new authority there, there is new jurisdiction, and it has
usually been a precedent to accord the agency new resources.
Senator Klobuchar. There has been a growing interest in
expanding derivatives market trading hours, 24/7 potentially.
The CFTC put out a request for comment. What is your view on
how the CFTC should approach this shift? Do you believe you
will need to revise its rules to accommodate these
developments?
Mr. Quintenz. Thank you, Senator. It is another very
important and fascinating question. I think what we have seen
globally through technology is the advent of 24/7 trading using
a technological process that does not exist in the traditional
regulated derivatives markets. As the agency is looking to try
to allow for that same kind of trading within its existing rule
structure, there are different kinds of concerns that need to
be addressed such as----
Senator Klobuchar. Well, like, for instance, price
dislocation, especially in lower volume markets like ag
markets. A lot of us----
Mr. Quintenz. Sure.
Senator Klobuchar [continuing]. are concerned on that
front.
Mr. Quintenz. Sure, sure, of course. The agricultural
contracts have unique trading hours, different trading hours.
They have different trading hours between them. I think, for
instance, the corn contracts trade more frequently, whereas
other contracts trade along more traditional hours.
I think the agency would want to ensure that we take the
view of all stakeholders into account, that we listen to the
people that use these markets, that the views of risk managers
and hedgers, especially in the agricultural space, are
paramount before we try to allow for or copy innovation and
then have it bleed through the system.
Senator Klobuchar. Okay. Thanks. I had some retail customer
questions that are important I will wait for at the end, or
maybe my colleagues will ask them.
Two remaining questions. One is on recusals conflicts, but
the first is on, given the CFTC was structured by Congress as
an independent commission, do you think it is appropriate for
the OMB Director, Director Vought, to play a central role in
reviewing the agencies and your performance in shaping spending
decisions and policy agenda? How does OMB's role relate to the
Commission?
Mr. Quintenz. Thank you, Senator. I would commit that the
agency will follow all executive orders, and we will comply
with those. I do believe that it is important that the agency
conduct robust cost-benefit analysis and have the partnership
with other agencies, including OIRA and OMB, involved in that
process, and I would commit to that.
Ultimately, should I have the honor of being confirmed, I
have a strong allegiance to and adherence to the statute, and I
care deeply about the mission of this agency, and that is what
I am going to tie my chairmanship to.
Senator Klobuchar. Okay. You are currently the head of
policy for a16z Crypto, a venture capital firm investing in
crypto companies, and you are also on the board of directors
for KalshiEx, a first-of-its-kind exchange that allows trading
of event contracts. Crypto is likely, as you know, to be a
major subject of rulemaking, as we have discussed, and a16z or
one of its portfolio companies could be the subject of
enforcement investigations.
The CFTC just ended its litigation with Kalshi, but events
contracts are also likely to be an issue before the Commission.
You have pledged to resign from these roles, divest your
financial interests, and recuse yourself from related matters
for one or two years. Please explain how you will carry out
your divestitures in the timeframes you agreed to, number one;
and then two, even if you recuse yourself and divest, there
will remain a potential appearance of a conflict. How will you
navigate these conflicts?
Mr. Quintenz. Thank you. Thank you, Senator. If I could
just first say that when I was a Commissioner previously, I
held myself to the highest standards of ethics and integrity.
My reputation is critically important to me. I do not think I
would have had the opportunity in the private sector following
my time at the agency if that was not the case. I will abide by
all applicable ethics, statutes, and regulations. I have a very
robust ethics agreement that does require my divestiture. I
will have a screener in my office to ensure that no matter
inappropriately comes before me.
There are a number of approved methods for divesting to
ensure that I can meet the timelines, and I am prepared to
explore all avenues to do that.
Senator Klobuchar. Thank you. Senator Hoeven.
Senator Hoeven. Thank you, Ranking Member.
Thank you for being here and coming and visiting with me in
my office, and also for your willingness to serve another time.
I think that is a great thing, given that you have not only all
your private world and educational experience, but you actually
have on-the-job experience that you bring as well. I think that
is good.
Our farmers do not control weather, prices, or markets, so
risk management is a huge thing to them, something you and I
talked about a little bit already. How we help them manage risk
is of paramount importance to this Ag Committee, and certainly
to me coming from an ag state, which is why we are so committed
to a countercyclical safety net, as well as enhanced crop
insurance, because those are risk management tools that make
sense for our farmers and ranchers.
Talk to me about how you will engage with farmers and
ranchers to make sure that they are able to use CFTC and
hedging products to further manage the incredible risks they
face.
Mr. Quintenz. Thank you, Senator. I also enjoyed my
conversation with you. Thank you for making time to visit with
me and discuss my trips around the country, including to your
state, and meeting with agricultural producers and end users.
In those travels, I heard often from the agricultural community
that the risk management derivatives markets are a critical
component of their hedging portfolio, a tool in a toolbox, but
it is certainly not the only one, and the others they rely on
are the ones you mentioned, the countercyclical programs and
the crop insurance programs.
There is an interesting tie between the crop insurance
programs and our futures markets. I believe that they are--the
crop insurance programs are priced, you know, in the spring and
in the fall, and they base those prices on the futures markets.
If the agency is not doing its job and futures markets for
those products are not accurately reflecting supply and demand,
then we have two of those tools that are not appropriately
serving farmers and ranchers and needs. I would pledge to you
to ensure that the agency focuses on its true mission, that the
products that are listed that they use have integrity.
Again, I would pledge to sponsor the Agricultural Advisory
Committee, which is a critical source of feedback from the
agricultural community around the CFTC's rules. I attended
every prior session that the Agricultural Advisory Committee
held when I was at--when I was a Commissioner, including
traveling for ones that we did outside of Washington, which I
have always viewed as a very important thing.
Senator Hoeven. Having served in this role once before,
what are the most important things you learned last time, and
what are your priorities this time? What are you going to do to
really make a difference this second time around? What do you
want to accomplish here?
Mr. Quintenz. Thank you, Senator. I think what I learned
last time--I learned a lot last time, but I would try to boil
it down into, number one, the agency has wonderful people. They
are dedicated to the mission of the statute and to the markets.
It is a small but mighty regulator. It has 650 people and
oversees a $350 trillion derivatives market and does it very,
very well. Perhaps, in my view, no one regulates markets better
than the CFTC.
One of the reasons it can do that so well is because, as I
said, it is a technology-first regulator, and it has the most
advanced technology of any regulator that I have seen. The
agency is able to get real-time, customer-level data from
clearinghouses so that they can immediately understand
sensitive periods of the market and stress and reach out to
customers and intermediaries to understand whether or not there
is stress in the market that they have to oversee. I developed
a big respect for the agency, its mission, and its function in
meeting that mission and the statutory mandates.
What I would like to do is, first of all, if it's not
broken, don't fix it. Make sure that we continue that critical
oversight over systemically important clearinghouses. Make sure
that we continue to allow for innovation in the marketplace.
Make sure that we continue to ensure that the core principles
of the CEA are being applied through both DCMs, the exchanges,
and the clearinghouses so that the new innovation that meets
the market is not inhibited by the agency, but that we can
ensure that those new markets do have integrity.
Senator Hoeven. What is the biggest challenge coming at us,
the biggest thing that we are going to have to deal with on the
horizon, biggest single challenge?
Mr. Quintenz. Well, I think it is, you know, the things
that we can expect and things we do not know about. Obviously,
the things we do not know about are the biggest challenges.
When I was at the CFTC previously, I do not think anyone really
saw the impact of the COVID pandemic coming, but there was a
period in March of 2021 or 2020 where the markets experienced
significant stress. In my view, the derivatives markets handled
that with flying colors. I do not want to minimize how
difficult it was for people in the markets and at--in the
intermediaries and at the exchanges, but the derivatives
markets performed very admirably.
I think the--you know, the--what we can expect as a
challenge is new oversight from Congress potentially, making
sure that we are prepared for that, making sure that we take a
technology-first approach, and that we hit the ground running
if Congress decides to give the agency that authority.
Senator Hoeven. Thank you. Again, I appreciate you being
here and look forward to working with you.
Mr. Quintenz. Thank you.
Chairman Boozman. Senator Smith.
Senator Smith. Thank you, Mr. Chair, Ranking Member, and
welcome, Mr. Quintenz, to you and your family.
When Congress established the Commodity Futures Trading
Commission, it designed the agency to be governed by a
bipartisan panel. You highlighted the strength of the Commodity
Exchange Act in your testimony, so I want to just hone in on
this a little bit.
The provision in the Commodity Exchange Act says that ``not
more than three members of the Commission shall be members of
the same political party,'' and Presidents have fulfilled
Congress' intent by consulting with the opposite party to
maintain that balance when they are filling vacancies. I
believe you were first nominated to be a Commissioner by
President Obama, if that is correct, and President Trump
nominated two Democrats, and President Biden did the same thing
in nominating a Republican. As you know, there are currently
three vacancies on the CFTC, and two other Commissioners have
announced their intentions to leave.
My question is, do you support maintaining the
bipartisanship of the CFTC?
Mr. Quintenz. Thank you very much, Senator. I can speak to
when I was there, and when I was there and the people with whom
I served, I had a very, very close working relationship with
them. I deeply respect the Commissioners and both of the Chairs
with whom I served. We had a very deliberative dialog. We
exchanged views consistently. A lot of times we disagreed.
Sometimes we did agree, and sometimes I agreed with my Democrat
colleagues on issues that the Chair was doing or against what
the Chair was doing, and that was on both Administrations and
so----
Senator Smith. Yes, that is the way it should be, probably.
Mr. Quintenz. I did value that experience. I would pledge
to you that--and I think the other thing that is important for
me to say is that when I joined the agency, it only had two
confirmed positions there, a Chair and a Commissioner. When I
left the agency, it ended with a Chair and one Commissioner. I
would pledge to you that if I have the honor of being
confirmed, no matter what the makeup is, I will try to
replicate the experience that I had----
Senator Smith. Yes.
Mr. Quintenz [continuing]. with who is there, and I will
ensure that the agency meets its statutory mission.
Senator Smith. Thank you for that. That is not exactly what
I asked. My question is whether you support maintaining that
bipartisanship of the CFTC. I think that is very important. You
know, the Ag Committee here operates frequently on a very
bipartisan basis. The issues that we work on are often not so
partisan. Sometimes we have regional differences. My question
again is would you urge the President to follow in the
longstanding tradition of nominating Commissioners to maintain
that bipartisan balance that is the intent of Congress, as laid
out in the Commodity Exchange Act?
Mr. Quintenz. Thank you, Senator. The President is the head
of the executive, and the President will make his own decisions
with the advice and consent of Congress. I would pledge to you
that I will work with whoever is at the Commission----
Senator Smith. Okay.
Mr. Quintenz [continuing]. and keep the bipartisan spirit
of the agency alive.
Senator Smith. Okay. That is disappointing.
Let me ask you about something else. Consolidation in the
ag sector can be a real problem for farmers as they try to get
fair prices and make a good living. For seeds and chemicals,
mergers between the largest players over the past decade have
resulted in just three entities controlling 80 percent of the
U.S. corn seed market and 70 percent of the international
pesticide market. In cattle markets, our Committee has worked a
lot on this. Producers are sometimes making pennies on the
dollar due to lack of packer transparency and competition.
Meanwhile, consumers are paying more and more for beef at the
grocery store, while big processors, which control about 85
percent of the market, see soaring profits.
Now, the CFTC plays a role in commodity price discovery as
part of its mission. Could you talk to me a bit about how you
see this role? The CFTC obviously does not have federal
oversight over mergers or antitrust issues, yet it seems clear
that ag concentration is a problem that affects our markets. Is
there a role for the CFTC here to play, helping producers get a
fair market value for their products?
Mr. Quintenz. Thank you, Senator. I think that there is a
role for the CFTC to play, ensuring that the futures markets
and the prices and the transactions have integrity and
represent supply and demand and that it is--they are free from
corners and squeezes, which are a requirement in the act, which
I think goes to your point around consolidation and----
Senator Smith. A fair market.
Mr. Quintenz [continuing]. possibly market presence and
activity there. There are position limit rules that, when I was
a Commissioner before, we implemented for the first time in new
commodities to ensure that those markets had integrity and had
the same kind of protections from a position limit perspective
as other commodities. I will pledge to you to ensure that we
focus our attention on fair, orderly markets so that, again,
the prices in the futures markets reflect supply and demand for
the use by the end-user community.
Senator Smith. Okay. Thank you.
Chairman Boozman. Senator Tuberville.
Senator Tuberville. Thank you, Mr. Chairman.
Mr. Quintenz, thank you for being here today----
Mr. Quintenz. Thank you, Senator.
Senator Tuberville [continuing]. you and your family.
Thanks for your willingness to serve.
You know, for the last four years, the Biden Administration
led an attack on cryptocurrencies and digital assets. It was
obvious to all of us. I think you know that better than
anybody. One of the ways they did this was by attacking leaders
in the digital asset industry like yourself. I am glad to see
that today we live in a new world with the most pro-crypto
President and Administration that we have seen. I am eager to
see you lead the CFTC as we enter the golden age of American
innovation and prosperity, and I look forward to supporting
your nomination.
When you came by my office prior to this hearing, we
discussed how you were debanked because of your leadership and
stance on digital assets for years. My Democrat colleagues said
that this was not happening. Obviously, it was. You were even
sent a letter informing you that you were being debanked.
Mr. Chairman, I would like to ask for unanimous consent
that the letter dated July 7, 2023, from UBS to Mr. Quintenz be
entered into the record. Thank you.
[The letter can be found on page 32 in the appendix.]
Senator Tuberville. Mr. Quintenz, would you like to discuss
this letter and the broader Biden Administration attack on
crypto?
Mr. Quintenz. Thank you very much, Senator. I was very
disappointed to receive that. First of all, I would like to say
that the relationship manager financial advisor mentioned in
that letter is a trusted family friend, and I do not hold this
against him at all.
I think the only reason why this would happen is because of
pressure from the regulators to debank a disfavored industry.
You know, these were accounts that were set up for my children
to receive $100 worth of stock from their grandparents for
Christmas, so I do not want to also overemphasize the pain that
it caused me, but I think it is endemic of what happened during
the last Administration that I do not think represented
American values.
I know from personal experience that there were investments
that our firm was trying to make into small teams, and our firm
could not even send them a check because they could not open a
bank account because they were in the crypto industry. I
believe legal businesses deserve access to legal services, and
I am glad that that is starting to change.
Senator Tuberville. Thank you. Probably a pretty tough
time, and I understand what you are going through. We are all
curious about the growth of prediction markets. Can you talk
about the benefits of the markets and how various businesses
and industries can use them for risk management when they
otherwise may not have access to appropriate hedging tools?
Mr. Quintenz. Thank you, Senator. When I was at the
Commission, I read the law, and the law was clear that the
Commodity Exchange Act recognizes that an event that poses
financial, commercial, or economic consequences is a commodity.
I think the reason that the Commodity Futures Modernization Act
of 2000 that was passed into law, signed by President Clinton,
did that was because it recognized that events pose risks to
individuals, small businesses, and large firms in the same way
that exposure to physical commodity prices do.
These have been hedged in various--events have been hedged
in various capacities for a long time. It has just been through
large Wall Street firms, through very complicated products
where there is not a lot of sight into how they operate and a
market trading mechanism to create clarity around that.
With the way that this innovation is evolving, there are
going to be many new methods for individuals to be able to
hedge risks that they otherwise could not because the
innovation can be targeted to a specific event, and they do not
have to use some other generic form of hedging that may not
correlate to that risk.
Senator Tuberville. Thank you. Can you discuss the
regulatory enforcement clarity between the SEC and the CFTC as
it relates to crypto and what further congressional actions
need to be taken?
Mr. Quintenz. Thank you, Senator. As I saw when I was at
the CFTC and as I saw after I left, the agencies either share
jurisdiction over the crypto spot enforcement markets or
markets through enforcement, but really it has been the SEC's
decision to make in terms of which products are securities that
then they carve out and take into their own jurisdiction.
Unfortunately, I believe that there was not any clarity that
was offered to the marketplace and to innovators and
entrepreneurs to understand how they could build something that
complied with the law or how they could build something that
was within the SEC's jurisdiction that was able to follow those
rules.
The--both agencies have had experience in the enforcement
area of crypto, but for the CFTC, it has mostly confined itself
to fraud, events of fraud, which are standard Ponzi schemes,
which is not necessarily people using cryptocurrency, but it is
saying that they are using cryptocurrency for investments and
then just stealing people's money. To the extent that new
clarity can be added so that innovators and entrepreneurs can
build compliantly I think is a critical thing for Congress to
consider.
Senator Tuberville. Thank you, Mr. Chairman.
Chairman Boozman. Senator Marshall.
Senator Marshall. Thank you, Mr. Chairman.
Mr. Quintenz, welcome to our meeting here, to our hearing.
We all understand the critical--let me do this one
actually. You already answered that one. The CFTC's developed a
reputation for being tough as a regulator, but also we are
having a good relationship with market participants and being
reasonable to work with on regulatory applications, but some
market participants have complained that the Commission has
lost its way in processing basic applications for regulatory
licenses, which have been taking an inordinate amount of time
for approval. What is your view of the CFTC's responsibility in
basic application processes, and will you commit to ensuring
that the CFTC meets its deadlines in considering such
applications?
Mr. Quintenz. Thank you, Senator. Let me say it was a
delight to spend time with you in your office and to recall
visiting Kansas, which I did a number of times, and again, I
would pledge to do so again and appreciate that discussion.
The agency needs to meet its mandate, both to the statute
and to the markets, and part of its statutory mandate is to
ensure that any new applications meet the core principles, but
also to ensure for fair competition, which I believe means
processing applications in a timely way, and if they meet the
obligations of the statute, if there is not any reason to
believe that anything nefarious is going on as the Commission
is evaluating new applications, I believe that it should do so
expediently.
Not having been at the Commission, I cannot speak to what
the delays are involving any applications that are there now,
but I would pledge to you and to the market to ensure that if
applications meet the standards of the act and meet the
standards for market integrity, the Commission will process
them expediently.
Senator Marshall. If you are confirmed, is there a way that
you would go in and measure that and determine what is a
reasonable amount of time, and when you do not do that, you can
report back to us and say, here is why we are failing? Is there
a way to measure it, I guess?
Mr. Quintenz. Yes, thank you, Senator. I have not
necessarily thought about that, but I think thinking, you know,
maybe a little bit off the cuff, I think, you know, one way we
could think about that internally is asking the reviewers for
applications how long it is taking them to respond with new
questions, you know, once the applicant has responded to the
previous set of questions to understand what--how long that
delay is.
Another is just a conversation with the reviewing team to
see what is the status of these applications when they come
into the building. Are they robust, or are they very weak, and
is there a lot of work that is required? How many applications
are we getting in general, and how are those being sorted?
Senator Marshall. Okay. If you cannot measure it, you
cannot manage it, so I hope you figure out a way to measure it.
Senator Klobuchar touched on this question I am going to
ask next, and I just want to maybe see if I can understand your
answer a little bit more clearly. We all understand the
critical role that ag futures markets play in the risk
management for our farmers. You mentioned that you have been to
Kansas. It amazes me pretty small relatively sized farmers are
now using your services in a good way, but it is my
understanding that innovation in digital assets is driving the
CFTC to consider new market structures such as 24/7 trading and
perpetual future contracts. We have some concerns about that
back in ag land, that they raise significant concerns for
farmers and other traditional market participants. How do you
view the CFTC's role in both allowing responsible innovation
and ensuring traditional market structures are not exposed to
potentially harmful changes that could impact ag markets?
Mr. Quintenz. Thank you, Senator. First and foremost, I
think it is critically important that the agency listen to the
end-user community and the agriculture industry to ensure that
we know very clearly what their preference is for how the
products that they use are traded. I think that there is the
opportunity for different kinds of innovations to affect
different industries at different times. There is no reason
that 24/7 trading, if it is allowed for and flourishes in one
area, has to translate to other areas. I think that is the case
now. I think the agricultural contracts have different trading
hours.
Again, I would pledge to you to have a very open dialog
with the agricultural industry. I have heard these concerns
already from them around expanded trading hours and the
possibility of getting liquidated while they are asleep, the
possibility of liquidity and concerns, and I take those views
seriously.
Senator Marshall. Great. I remember I think that the CFTC
was set up in many ways to serve agriculture, not necessarily
some of the newer Johnny-come-lately, so thank you.
Mr. Quintenz. Thank you.
Chairman Boozman. Senator Schiff.
Senator Schiff. Thank you, Mr. Chairman.
I want to start out by talking about futures contracts,
events futures contracts. I know this is a space you are well
familiar with from your role on the board of directors of
Kalshi.
I am proud to represent more than 100 federally recognized
tribal nations in California that have the exclusive right to
offer gaming in California, and I am very concerned that these
event contracts, which seem pretty indistinguishable, at least
from the consumer point of view, violate--indistinguishable
from gaming, violate tribal sovereignty, undermine state and
tribal gaming compacts, and conflict with the Indian Gaming
Regulation Act. Federal law dictates that the tribes, not CFTC,
have exclusive rights to police gaming within their territory.
If you are confirmed, do you commit to exercise CFTC's
statutory and regulatory authority to call these contracts in
for review?
Mr. Quintenz. Thank you, Senator. I appreciate the concerns
that you have mentioned. I think this is a--an area of the
marketplace that the agency used flexibility that it found in
the statute in a way that hampered its growth.
I believe that the law is very clear about events that have
commercial or financial or economic consequence qualifying as
commodities because the act recognizes that, therefore, a
viable and valuable futures market can be listed upon them and
afford people the opportunity for risk management, price
discovery, and price dissemination, which are the three cited
national interests for the Commodity Exchange Act in Section
3(a).
I would pledge to you, given that this is an area that has,
I think, more recently found legislative clarity given the
actions of the agency previously, that I would have a very
robust all-stakeholder engagement process around this. I would
listen to the concerns of the tribes that you mentioned.
Nothing in the CEA that I am aware of prohibits or affects the
opportunity of tribes to offer those products and those markets
and those services.
Senator Schiff. Well, in my view, betting on the outcome of
a sporting event looks like sports betting, looks like gaming,
smells like gaming, sounds like gaming, there are winners and
losers like gaming, it is probably gaming. If, indeed, it is
determined that these contracts do amount to prohibited gaming,
violating tribal sovereignty and jurisdiction under the IGRA,
will you require the contracts to stop?
Mr. Quintenz. Thank you, Senator. I need to--should I have
the honor of being confirmed, I believe that I need to abide by
the Commodity Exchange Act. If there is a conflict between the
Commodity Exchange Act and the other act you mentioned, I
believe that is best resolved through Congress. I believe the
Commodity Exchange Act is very clear about the purpose of
derivatives markets, the purpose of risk management and price
discovery, and that events can serve a function in that
mandate.
Senator Schiff. If the courts determine that, in fact,
these are prohibited gaming contracts, will you enforce the law
and require the contracts to stop?
Mr. Quintenz. I think that, depending on the outcome of the
court case and where that is in the court system, the agency
will follow the appropriate court mandate, but----
Senator Schiff. Are you indicating that if the court should
rule that there are illegal gaming contracts, that you would
appeal because you personally disagree with the rule, or would
you recuse yourself having come from a gaming business that
would be affected?
Mr. Quintenz. No, Senator. I think that I would need to--
and I think that the agency would want to ensure that it is
appropriately defending the Commodity Exchange Act and the
remit that the agency has to regulate and preempt laws--state
laws around futures and derivatives markets.
Senator Schiff. Finally, you said you would encourage
community engagement. There was a commitment to hold a public
roundtable, and leaders were ready to fly out to attend it I
think in February, but it was abruptly canceled. If confirmed,
will you commit to holding this public roundtable?
Mr. Quintenz. Yes, Senator. I have no information as to why
it was canceled, and I would be happy to reschedule it.
Senator Schiff. Would you do that before you issue any
guidance on this topic?
Mr. Quintenz. Since I do not have any plans to issue any
guidance in the near term, so I would feel comfortable making
that commitment.
Senator Schiff. Thank you. I appreciate it.
Thank you, Mr. Chairman. I yield back.
Chairman Boozman. Senator Hyde-Smith.
Senator Hyde-Smith. Thank you. Thank you, Mr. Chairman.
Thank you, Mr. Quintenz, for your appearance here. I enjoyed
our visit in my office, and we talked about a lot of things
about Mississippi. I really appreciate your willingness to
serve.
Mr. Quintenz. Thank you.
Senator Hyde-Smith. That is a lot, stepping up and having
to go through this process right here and many others, so thank
you for being willing to do that.
I want to talk about something that has already been
discussed, the rapid growth with the digital asset sector. Of
course, we have seen an entirely new market emerge because of
that, bringing its new products, its market participants, and
the occasional bad actor at times, all culminating in more
significant work for the CFTC. I believe the Commission
deserves credit for how it has handled these new
responsibilities, and I believe the challenges ahead will only
grow with Congress considering legislation that could further
expand your jurisdiction as well.
How do you plan to ensure the Commission remains focused on
its core mission of supporting well-functioning, transparent
futures, the markets that producers can rely on for risk
management?
Mr. Quintenz. Thank you, Senator. It was a delight to visit
with you in your office and, again, recollect about my visits
to your state and Indianola and would love the opportunity to
head back should I have the honor of being confirmed.
It is a very important question. The agency's markets, as
they exist today, cover $350 trillion worth of hedging
transactions and price discovery transactions that affect the
real world economy in areas like--that depend on metals,
energy, agriculture, different kinds of financial products like
interest rates. There is no room to ignore or to let up on
ensuring that the agency meets that critical mission,
especially when it comes to our systemic risk mandate.
A lot of people I do not think appreciate the fact that the
CFTC is a systemic risk regulator that oversees what I believe
are the most important--systemically important institutions,
financial institutions in the world. We have no--I would have
no tolerance for ignoring those markets, and I would pledge to
ensure that the agency's full attention and historic attention
is placed there.
Senator Hyde-Smith. Thank you. Over the past few years, we
have seen growing public interest in prediction markets, and
not just for trading but as tools for forecasting, academic
research, and even policy analysis. At the same time, questions
have been raised about where to draw the lines, around what
types of events are appropriate for public contracts, and what
falls outside the scope of the CFTC's mission.
If confirmed, how do you believe the Commission should
approach prediction markets, particularly when it comes to
balancing innovation with the need for regulatory clarity and
market integrity?
Mr. Quintenz. Thank you, Senator. I think the last thing
that I would want to do, should I have the honor of being
confirmed, is to be a value judgment regulator, try to express
my own value judgments on a marketplace and undertake a process
that is opaque and inconsistent and likely illegal. In the
past, the agency has taken an approach that I had disagreed
with in terms of that--adjudicating which kinds of contracts
may be acceptable or not.
I believe that it is the role for this body and for
Congress to decide what is acceptable or appropriate. I think
it is the role for the agency to follow the statute. The
statute, as I have said a number of times, is very clear that
it is the purpose of the Commodity Exchange Act and the purpose
of the CFTC to support derivatives markets that provide for
hedging, risk management, price discovery, and price
dissemination. I would try to take a very clear approach that
is predictable, repeatable, durable, and legal.
Senator Hyde-Smith. Thank you. Thank you, Mr. Chairman.
Chairman Boozman. Senator Booker.
Senator Booker. Thank you so much, Mr. Chairman.
I am looking forward--I hope I can get to what is really
one of my missions, which is to get a market structure bill
here done and talk about the CFTC's role in crypto oversight. I
want to pick up on a line of questioning, which I thought was
excellent questioning by my colleague, Senator Schiff.
I have a lot of reservations, I have to say, about the
explosion in advertising for sports betting, some of the
addictive-by-design tactics employed by the industry. It is
ultimately the law of the land. Should you be confirmed, you
are going to have a very important role to play in this
emerging space.
We now know that Kalshi, who we have been discussing, they
are having significant efforts to offer event contracts on
sports events, which closely resemble sports betting. Now,
Kalshi's own advertising--I looked at Instagram--says, ``Sports
betting legal in all 50 states on Kalshi.''
I just want to talk a little bit about your independence in
this space. Now, you gave the following statement while you
were a CFTC Commissioner. ``The statutory definition of
commodities includes an occurrence, extent of an occurrence, or
contingency that is (1) beyond the control of the relevant
parties to the contract; (2) associated with a financial,
commercial, or economic consequence.'' (3) since practically
any event has at least a minimal financial, commercial, or
economic consequence, all events are commodities. Because of
this definition, any contract on the outcome of a future event
would be considered a commodity futures contract and, pursuant
to the Commodities Exchange Act, is required to be traded on a
registered designated contract market.'' Do you still agree
with that statement today?
Mr. Quintenz. I do.
Senator Booker. Okay. Help me understand, does that mean it
would be illegal for sportsbook or tribal communities to take
bets on sports outcome in New Jersey or California or Nevada
unless they are registered with CFTC exchanges?
Mr. Quintenz. No, Senator. The quote that you read may have
omitted a critical detail, which is if those contracts are
traded across state lines.
Senator Booker. Okay. To me, I just, on the face of it,
even with the omission that you just speak to, I just feel like
it is undermining the clear language of the Commodity Exchange
Act, which states that ``Event contracts involving gaming shall
not be listed if the CFTC determines that they are contrary to
the public interest.'' Would you agree with that?
Mr. Quintenz. There is a special rule for the review of
event contracts, yes. It does mention specific kinds of events
that could trigger----
Senator Booker. Right----
Mr. Quintenz [continuing]. that review.
Senator Booker [continuing]. and you would have a role in
this position----
Mr. Quintenz. Yes, Senator.
Senator Booker [continuing]. on determining this space?
Mr. Quintenz. Yes. Although I would say--and I have spoken
about this. I had a very, very long statement when I was a
Commissioner previously on this, that that provision of the
statute troubles me in terms of trying to execute it with
repeatability and legality, especially in a post-Loper Bright
world because there is no framework that was provided for by
Congress in terms of how to execute that appropriately. What
constitutes the public interest? What constitutes an
appropriate kind of----
Senator Booker. I agree, but you are going to be in this
space, and I am hoping that we can talk more, not in the last
two minutes that I have, about the role, power, and authority
you will have in this space. I hope you can appreciate that
there will be some real questions to your independence in that
role, given the fact that you sat on the board of this--you can
understand that there would be concerns about that, yes?
Mr. Quintenz. I can certainly understand, and I think that
is why----
Senator Booker. Let me add, because I am running out of
space. I told you where I want to try to go, but Donald Trump,
Jr. was hired by Kalshi on January 13 after his father was
elected President of the United States nine days before it
began offering sports contracts, one week, again, before
President Trump was inaugurated. I am worried that you are
going to be in a position where, if Chairman, are you going to
feel empowered to prosecute a company or push back on a company
that is being advised by the President's son? This deserves
some exploration.
I want to be able to ask you one last question, but there
is a lot more here that has to be discussed as I am hearing
from a lot of parties that are questioning the independence.
Given the culture of corruption that I believe we are seeing in
our country right now where a President has a meme coin that is
being invested in by foreign companies, where Americans are
justified in wondering the influence that is having on our
policy, you are sitting in a position coming from a company
with the President's son, we really have to explore that more,
and I am hoping that the Chairman and the Ranking Member would
want to.
I very much really want to spend my time working on getting
that market structure bill. I really want to talk to you more
of it. I am out of time now, but I am hoping you will be
willing to have a conversation as my Subcommittee on this
Committee really is focused on driving something forward. This
is an area that needs regulation. This is an area that needs
rules that we can create a lot more transparency and a lot more
trust. That right now in this space of digital assets, the
space of sports betting with a lot of things happening in
America that have never happened before with the President so
intertwined and his family so intertwined in areas that are
seeing extraordinary profits right now, it is very important
that we have the objectivity necessary to govern in this space,
and I hope we can talk about that more.
Mr. Quintenz. I would pledge to have that conversation with
you and to have that relationship.
Senator Booker. Thank you.
Chairman Boozman. Senator Justice.
Senator Justice. Thank you so much, Mr. Chairman, Ranking
Member, and our colleagues.
I want to just say just this. We have the opportunity to
nominate a fellow here that is the real deal. I mean, Brian
Quintenz is the real deal. I would just say just this. From the
standpoint of our questioning and everything, I wish to
goodness that we could someway, somehow move ahead and leave
the politics on the sideline. You know, I truly believe that
this is a business guy. This is a farmer. This is a guy that
absolutely values the ability that farmers--and I am one of
them--have to be able to hedge our products and to be able to
watch what is going on in the grain world or whether it be the
lumber world or the energy world, and that value to us is
really important.
Now, I have got to say just this too. He knows how to
safeguard us from the standpoint of we in Congress, first and
foremost, but then the CFTC, we need to ensure the bad actors
do not become at play and they absolutely--we have got to
someway, somehow prevent manipulation that could really cause
us all a problem.
Now, let me just say just this. I am a believer in crypto.
I am a believer in where we are going to go. I believe that it
is a future that absolutely provides an opportunity to this
Nation that is off the chart, off the chart in all kinds of
ways. You know, I do not think we can pass the GENIUS Act any
faster than--I mean, I am the most impatient guy in town all
the time, and I think we need to get across the finish line
right now.
Here is my question, sir. I really believe that our
Chairman is the real McCoy, and I believe absolutely right
behind all of that, I believe that from the standpoint of
market structure, market structure is hanging in the looms. You
see, really the crypto world today needs us to stand up and say
legitimate, legitimacy. That is the very first thing that needs
to happen. Then right behind that, we need to absolutely be
sure--and I always call the voters Toby and Edith, so forgive
me--but we need to ensure that absolutely Toby and Edith know
that they have access, that absolutely they understand--they
come into our world.
With all that, I would say to you, sir, just this. You see,
I think the next step forward with market structure is
terribly, terribly important. Tell me your feelings.
Mr. Quintenz. Thank you, Senator. I completely agree with
you. I think--as I think about the crypto ecosystem, the crypto
market, and the historical role for financial regulation, you
know, there are--and as I reflect on kind of a philosophical
approach to financial regulation, usually, people come down on
one side or the other between being pro-innovation or pro-
customer protection. There is certainly a very strong middle
ground there, but usually, you know, you can think about, you
know, favoring one, you know, over the other, and the extreme,
you know, pro-innovation philosophy is a very libertarian
philosophy, and it does not matter how many people get harmed.
In a pro-customer protection philosophy, it is a precautionary
principle approach where you have to prove that nothing bad
will ever happen, which means you never have innovation at all.
Usually, things come down in the middle, and you have to take
some kind of choice.
I have always viewed market structure legislation as an
opportunity to be both pro-customer protection and pro-
innovation at the same time because it can provide the clarity
to builders, entrepreneurs, innovators to develop products that
can become networks, that can become decentralized, and that
can allow people to own how they participate in those networks,
while at the same time ensuring that firms that are central,
that are businesses, that service customers and require
customer trust are appropriately regulated, which is the
hallmark of financial regulation that we have had in this
country for decades, if not centuries.
I feel like we can do both at the same time, and I would
pledge to you that if the CFTC gets authority, it will be
ready.
Senator Justice. I would answer bingo. That is all there is
to it.
Mr. Chairman, I am a full believer if someway, somehow, we
could move forward, because the opportunity is right at our
fingertips, if we could move forward with both today, it would
be the right move to do. Thank you so much, sir.
Mr. Quintenz. Thank you.
Chairman Boozman. Thank you. Senator Lujan.
Senator Lujan. Thank you, Mr. Chairman.
Mr. Quintez--is it Quintez or Quintenz, sir?
Mr. Quintenz. Quintenz.
Senator Lujan. Quintenz.
Mr. Quintenz. Quintenz. Thank you for being with us today,
and appreciate your family being here as well. It takes a lot
out of your days as well to travel around with family, and it
says a lot that family is with you in my opinion, sir.
Now, as you have heard today, and as you know, Brian,
Congress is grappling with a common issue here. How do we build
a regulatory structure around something that is new and
technology that is advancing? Now, in this case, specific to
cryptocurrency, one of the conversations that I have been a
part of is how can we foster American innovation while also
protecting consumers, looking at creating the strongest
environment anywhere in the world in America.
Now, the Committee has done important work to think through
some of the hard questions on what a robust regulatory
environment would look like. Now, I want to ask about your view
on how CFTC would approach this task. Now, as you know, the
CFTC is a small agency compared to the SEC. Yes or no, do you
believe if the CFTC was given more explicit authority over
digital assets, would the agency need more resources, including
staff and infrastructure?
Mr. Quintenz. Thank you, Senator. I should say yes to that.
I think that it is--it is precedential that new jurisdiction
comes with new resources. The historical remit of the agency,
as I have described many times, is critically important. We
cannot take our eye off of that ball. To the extent that new
authorities come to the agency, I think there are ways that we
can make every taxpayer dollar spent the most efficient way
possible, but I would anticipate that new resources would
likely be needed.
Senator Lujan. I agree with you. Now, if you are confirmed,
or I should say when you are confirmed, would you seek more
appropriated funds if you needed it to respond to a rapidly
growing crypto market?
Mr. Quintenz. Thank you, Senator. I would be very
transparent with you and your colleagues on this Committee
about what I felt the needs of the agency were. I think former
Chairman Russ Behnam did create his own budget request that I
think called for $120 million increase in the first year that
then scoped down to $60 million. I do not have any visibility
into what went into that, but I would want to review it and
either adopt some of it or maybe redo it from a different
perspective, but ensure that, again, we would take a
technology-first approach to that and we would ask for what we
needed.
Senator Lujan. I appreciate that. Now, anti-money launder
regimes, which digital asset companies have to prevent their
platforms from being used for illicit activities. If confirmed,
how will you work to oversee digital asset providers, AML
regimes, now that the United States Department of Justice has
deprioritized pursuing regulatory violations like compliance
with Bank Secrecy Act violations associated with money
laundering and other commodity laws on digital asset companies?
Mr. Quintenz. Thank you, Senator. Yes, so entities
regulated by the CFTC currently, you know, qualify, I believe,
as financial institutions and therefore have to have AML/KYC
programs supervised by the Financial Crimes Enforcement
Network, FinCEN.
In the crypto ecosystem, any intermediary or centralized
business that has a customer relationship that accepts and
transmits customer funds qualifies as a money services business
and is also under, you know, FinCEN's remit. I would imagine
that both of those things, if Congress decided to pass a new,
you know, regulatory authority, would not change.
Senator Lujan. I appreciate that. I am concerned from this
announcement from the Department of Justice. You know, there
are criminal networks out there involved in human trafficking.
Fentanyl is exploding, taking our constituents every day. I
believe that if bad folks anywhere in the world want to do
something, because they are making a dollar, they are going to
keep doing it. They are going to keep laundering money,
whatever it may be. For the United States to take its eye off
of money laundering just seems like a big mistake. All eyes are
going to be on CFTC in this particular space to make sure that
we are able to get that right and that we do not let bad people
do bad things.
Mr. Chairman, I have some other questions in and around
sports gambling. You know, the Supreme Court decision a few
years ago said that it was states, not the Federal Government's
decision to allow for sports betting. Many states passed local
legislation, things of that nature. New Mexico is one of those
that immediately responded. I will submit those into the record
as well to be respectful of my colleagues' time.
I really appreciate you being here today. Thank you very
much.
Mr. Quintenz. Thank you, Senator.
Chairman Boozman. Senator Warnock.
Senator Warnock. Thank you very much, Mr. Chair.
Congratulations, Mr. Quintenz, on your nomination.
Congratulations not only to you but to your family.
Mr. Quintenz. Thank you.
Senator Warnock. In March, President Trump violated the law
by firing the two Democratic Commissioners at the Federal Trade
Commission without cause. Then in April, President Trump
ignored the law again and fired the two Democratic Board
Members at the National Credit Union Administration, again
without cause. These seats remain vacant, and there will soon
be more Democratic vacancies at the FDIC, the Securities and
Exchange Commission, and the CFTC, the Commission, of course,
you have been nominated to Chair. Is it correct that you were
originally nominated by President Obama?
Mr. Quintenz. Yes, Senator. I was nominated twice
previously by President Obama and by President Trump.
Senator Warnock. Right. A Democratic President initially
nominated you to fill a Republican seat on the Commission. Is
that correct?
Mr. Quintenz. That is correct.
Senator Warnock. During your term as a Commissioner at the
CFTC, can you think of an example of any business before the
Commission that was improved by having both Democratic and
Republican Members at the table?
Mr. Quintenz. Thank you, Senator. In response to another
question, I can only speak to the people and the environment in
which I had served previously. I had a very, very strong
relationship with my fellow Commissioners and both of the
Chairs under which I served, very cordial. I count them all as
dear friends. Now, a number of occasions we disagreed, but on
some occasions, we did agree.
Senator Warnock. Do you think that disagreement is helpful
and healthy? Do you think there is some benefit to having a
bipartisan board?
Mr. Quintenz. I think there can be. I mean, I thought I was
right, but, you know----
Senator Warnock. You embody, in some ways, the trajectory
of your work on this Commission, nominated by a Democratic
President, filled a Republican seat. I think Democratic boards
play an important role, and I think that the friction in points
of view is helpful. Would you agree with that?
Mr. Quintenz. Again, I think it can be, Senator, sure.
Senator Warnock. I will accept that. It can be. I think
this is a bad precedent set by President Trump, and I am
worried that it imperils the actual independence of many
crucial regulators, including the CFTC. Americans need to know
that these agencies work, regardless of who the President is,
and I think there is a certain kind of credibility that comes
with this kind of bipartisan spirit in the work.
The CFTC currently has three vacancies. Do you support
President Trump nominating a full CFTC, including Democratic
Commissioners?
Mr. Quintenz. Thank you, Senator. The President is the
Chief Executive, and that is----
Senator Warnock. I think it is a pretty simple question.
Mr. Quintenz. That is----
Senator Warnock. Do you support--that is really a yes or no
question. Do you support President Trump nominating a full
CFTC, including Democratic Commissioners?
Mr. Quintenz. I would pledge to you to have--try to emulate
the same environment of the Commission, should I have the honor
to be confirmed, that I got to experience when I was there with
whoever is serving with me.
Senator Warnock. I think I asked you a pretty easy
question. If confirmed, will you advocate to the White House
for the President to nominate and the Senate to confirm both
majority and minority Commissioners to the CFTC?
Mr. Quintenz. Thank you, Senator. With respect, the
President is the chief executive, and he can make that decision
with the advice and consent of Congress.
Senator Warnock. Yes, I understand he makes the decision.
Would you advocate for it?
Mr. Quintenz. I do not tell the President what to do, sir.
Senator Warnock. If the President continues to ignore
precedent and the law and never nominates a Democratic Member
of the Commission, which ignores precedent, it ignores the
law--you will be the Chair of the CFTC; you will get
confirmed--so how will you as Chair work to moderate then the
CFTC and incorporate dissenting and minority viewpoints in the
Commission's decisions?
Mr. Quintenz. Thank you, Senator. With respect, I do not
want to speak to all the different kinds of hypothetical
environments that the Commission may experience, but I would
pledge that--one of the core attributes of the Administrative
Procedures Act is to put out any kind of rules and notices for
public comment. Responses to public comment need to be
incorporated in any kind of final Commission action. There is a
wide opportunity for dissenting views in the public comment
process. I would seek to receive comment from as wide of
sources as possible, and I would pledge to work with you and
your colleagues to have a very transparent approach to my
chairmanship, should I have the honor of being confirmed.
Senator Warnock. Do you think Democrats ever get it right?
Mr. Quintenz. I look forward to working with them.
Senator Warnock. Do Republicans ever get it wrong? Do
Republicans ever get it right?
Mr. Quintenz. No one has a monopoly on the best ideas,
Senator.
[Laughter.]
Senator Warnock. Thank you. I think that the erosion of the
independence of key regulators like the FTC and the NCUA is
alarming. It is a very serious point I am really trying to make
as we have this conversation, and I hope, you know, you will
hear the spirit with which I am trying to make these points
because our markets are counting on it, our consumers are
counting on it. These agencies protect us from the worst things
that could happen. These political purges--because that is what
we are witnessing. These political purges have weakened the
regulators and undermined their independence, and I am worried
that the CFTC will follow suit if the important tradition of a
bipartisan board goes away.
If confirmed, you will have the responsibility, sir, to
preserve the bipartisan spirit of moderation at the CFTC,
proactively pulling in minority voices whether or not President
Trump follows the law. I look forward to holding you
accountable for that responsibility if you are confirmed. Thank
you so much.
Mr. Quintenz. Thank you.
Chairman Boozman. Before I ask my questions, I would like
to add letters of support from various groups for Mr.
Quintenz's nomination into the record. Without objection, so
ordered.
[The letters can be found on pages 33-40 in the appendix.]
Chairman Boozman. I think you have heard a lot from the
Committee today in a bipartisan way that we would like to get
some sort of a bill passed to regulate the digital commodity,
give regulatory authority to the CFTC. As Congress deliberates
on granting the CFTC spot digital commodity regulatory
authority, what key considerations should Congress weigh? Why
do you believe the CFTC is the right regulator for spot digital
commodity trading?
Mr. Quintenz. Thank you, Mr. Chairman. I think the
wonderful and the scary thing about this technology is that it
is software and it can be anything, which also means that it
can evolve. It has new ways of being governed. Under certain
kinds of, you know, programming and features and governance,
the description that I hear from the founder of our fund that
echoes with me is that it is a--and I will modify this a little
bit--it is a globally accessible computer that can make
transparent commitments. That is a very powerful thing, which
also means that, you know, as crypto assets and blockchain
technology evolves and becomes decentralized and allows
networks to form and that governance process to be released
outside of the control of an individual person or an entity or
a business and be distributed in a transparent way, that poses
new and interesting questions from a regulatory perspective,
given that networks never just exist. They have to start
somewhere, they have to grow, they do have to evolve. We cannot
take action that would preclude that from happening, but we
also have to be careful when that is happening that customers
are protected.
I think that gets to the point that I was trying to make
previously about taking an action by Congress that can be very
pro-innovation and pro-customer protection at the same point. I
do believe that if Congress decides to give authority to the
CFTC to regulate spot digital commodity markets exclusively,
with clarity, I think the CFTC is more than up for that mandate
and that mission. We have, I think, some of the smartest people
in all of government at the agency with some of the best
technology in all of government, and as I said, anywhere on the
planet. We have 10 years of history in the crypto asset
environment from starting with enforcement cases, but then
wonderfully moving to innovation with the listing of the first
regulated Bitcoin futures contract in the world. The insight
that that gave the agency over the spot market through its
derivatives market mandate, I think, is an extraordinary thing.
Chairman Boozman. Twenty-five years ago, Congress
recognized that self-certification strikes the right balance of
allowing the Commission to prohibit contracts that violate the
law while also fostering liquid and efficient markets and
allowing for market innovation. Can you talk about the
importance of self-certification?
Mr. Quintenz. Thank you, Senator. I believe it was a
critical feature of the Commodity Futures Modernization Act of
2000. I think, if--you know, theoretically, if you put yourself
in the shoes of a regulator, and I have been there, there is
not a lot of incentive to improve new products. The--you bear
all the downside risk, and you get none of the benefit of the
success, so it is natural to focus on all the risks. At the,
you know, extreme, the precautionary principle approach where
you have to prove that nothing bad could ever happen before you
allow something to happen means it will never happen. That is
proved out in the data.
You know, in the 70 years before self-certification
existed, futures contracts--when the CFTC had to approve new
futures contracts, futures exchanges listed about 700 products
in total. In the 20 years since self-certification came online
through the Commodity Futures Modernization Act, 16,000 new
contracts have been listed by exchanges. None of them caused
the financial crisis. Many of them were delisted because they
did not develop liquidity, but some of them became critical
risk management, liquidity, price discovery, markets. That is
what I think the benefit is of the self-certification
framework.
Chairman Boozman. Very good. Have you got any other things?
Senator Klobuchar. Yes, just one more. I mentioned on the
retail customer participation. Well, you are well aware because
you were at the CFTC, that derivative markets have historically
been used primarily by large, sophisticated entities, but
recently, we have seen increased participation by smaller
retail customers, especially the events contracts and digital
asset derivative markets. What, if anything, do you think the
CFTC should do in response to the increasing retail
participation? Do you think that the agency needs to do more to
address risks in this area?
Mr. Quintenz. Thank you, Senator. I think it depends on
whether or not there is direct access or whether or not there
is intermediation. There are a lot of--there are strong
customer protections across both models. All contracts traded
by exchanges have to abide by the 23 core principles, including
things like fair and orderly markets, surveillance, not readily
susceptible to manipulation, conflicts of interest, et cetera,
that provide markets with integrity.
There is an extra layer of customer protection when they
are intermediated by the FCM community that have to do
disclosures associated with potential loss in education and
outreach. There are even some exchanges that do go direct to
market participants that have those same customer protections
listed in their licenses. Those are certainly models that we
can look at. I take your point, and I would pledge to have an
open dialog with you around those issues.
Senator Klobuchar. Thank you.
Chairman Boozman. One very last final thing, and then we
will be through with this, but can you talk about the
importance of principles-based regulation and specifically how
it helps foster innovation?
Mr. Quintenz. Thank you, Mr. Chairman. I mentioned this
briefly in my written testimony, my opening statement. I am a
strong believer in the benefit of principles-based regulation
for a few reasons. The first is that I believe it allows
responsible innovation and allows the marketplace to evolve, to
try new things, to be held to a standard of best practices,
which do continue to evolve on their own. It prevents a one-
size-fits-all regime that locks in a technology approach or a
standard approach.
In order for it to be done compliantly and responsibly,
there has to be a strong dialog between the regulator and the
marketplace to ensure that the regulator understands the
different approaches that are out there, and I think that that
is a very valuable exchange of information.
We do not need to look any further than how wonderful these
markets are to understand the importance of principles-based
regulation. The CFTC oversees the most resilient and the most
liquid and the most innovative derivative markets in the world,
and in my belief, it is because of the principles-based
framework in the CEA.
Chairman Boozman. Go ahead.
Senator Klobuchar. No, thank you.
Chairman Boozman. I thought we had one more final, final.
Okay. Well, thank you again, Mr. Quintenz, for appearing
before the Committee.
I want to thank the Members for their participation today
and, as always, for our staffs for making all of this happen.
The record will remain open for two business days.
With that, the hearing is adjourned.
[Whereupon, at 4:34 p.m., the Committee was adjourned.]
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