Rostin Behnam, chair of the Commodity Futures Trading Commission (CFTC), has praised the Proof of Stake (PoS) consensus mechanism, suggesting that it is the time for Bitcoin developers to move away from the Proof of Work (PoW) model. According to him, the existing process for getting Proof of Work cryptocurrencies such as Bitcoin is skewed. Behnam is serving his first term as CFTC chair.
Why should the Bitcoin community shift to Proof of Stake?
The top regulator was speaking at POLITICO’s Sustainability Summit on May 18. He stated that Bitcoin’s mining mechanism was neither environment-friendly nor sustainable. He further claimed that BTC’s economic contribution was being eclipsed by its massive energy use.
On cryptocurrencies’ environmental sustainability issue, he informed the followings:
“There is a clear dislocation between the usage and generation that’s needed to mine these coins and the sort of economic output that we’re seeing from digital assets themselves. It may rebalance over time, but it’s certainly unbalanced right now.”
He further explained that Proof-of-work is a lot more energy-intensive and costly than proof-of-stake, and many programmers have already started to move to proof-of-stake.
He further added that one approach to force the digital assets market toward PoS is to implement legislation mandating corporations to reveal how much energy a cryptocurrency consumes. This would assist investors in picking coins with greater environmental incentives, encouraging the industry to pursue PoS networks.
Role of CFTC as a regulator for cryptocurrencies
With the introduction of digital assets, the CFTC has been viewed as the key regulator of the emerging industry due to its involvement in regulating the US derivatives markets. Also, when Congress adopts crypto legislation, the CFTC along with the Securities and Exchange Commission (SEC) will likely be given specific authority to manage the digital asset regulation.
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