CFTC Chair Reiterates Stance, Calls Bitcoin And ETH Commodities
The Chair of the Commodity Futures Trading Commission (CFTC), Rostin Behnam, reiterated their stance on Bitcoin (BTC) and Ether (ETH), calling them commodities, not securities.
The comments were made at a “Regulating Financial Innovation: The Future of Crypto and Blockchain” symposium hosted by the Rutgers Center for Corporate Law and Governance, the Wall Street Blockchain Alliance, and Lowenstein Sandler LLP.
ETH A Commodity Despite Switching To PoS
The very public power struggle between the Commodity Futures Trading Commission (CFTC) and the United States Securities and Exchange Commission (SEC) over regulatory oversight of the crypto markets continues to simmer. With both market watchdogs looking to establish their authority, the CFTC Chair has reiterated their position, stating that Bitcoin and ETH are commodities. However, the CFTC Chair also played down the narrative of a turf war between the two agencies taking place.
Behnam stated during the event,
“I’ve suggested [Ether] is a commodity, and Chair Gensler thinks otherwise.”
Gary Gensler, the SEC Chair, has stated that he is willing to recognize Bitcoin as a commodity. However, he does not share the same sentiment when it comes to other assets in the crypto space, namely ETH and XRP.
Gensler Sticks To His Guns
Ethereum recently moved from a Proof-of-Work consensus mechanism to a Proof-of-Stake system, after which the SEC chair hinted that the organization could classify the asset as a security. Gensler also indicated that staking might be considered an investment by the SEC, and if ETH passes the Howey Test, then it will have to register with the SEC as a security.
However, the CFTC Chair disagreed with Gensler on classifying ETH as a security. He also dispelled the belief that the CFTC would be a more favorable regulator of cryptocurrencies, a view fueled by the SEC’s crackdown on the crypto markets.
“The underlying fear and concern is we’re not doing enough. If we had more resources, we could bring more fraud and manipulation to light.”
Regulatory Clarity Needed
The classification of crypto assets has been an issue plaguing the crypto space for some time now and stems from a need for regulatory clarity. This has significantly slowed down the adoption of crypto in the United States. In 2018, the then director of corporate finance at the SEC, William Hinman, certified Bitcoin and Ethereum as non-securities in a widely acclaimed speech.
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However, current SEC Chair Gensler suggested that Ethereum’s shift to Proof-of-Stake could classify it as a security.
SEC And CFTC Have To Work Together
The CFTC Chair added that the SEC and CFTC would continue to collaborate because, contrary to popular belief, the Digital Commodities Consumer Protection Bill does not give any agency complete authority regarding the classification of cryptocurrencies. As a result, Behnam insisted that both agencies have to ensure complete cooperation.
“It’s a pretty cynical view to suggest two agencies can’t figure it out and work together. This is the million-dollar question. How do we engage with the SEC when a product is in the gray area?”
He added that both agencies need to work together and develop a solution to ensure clarity in the classification of crypto assets, arguing that legislation would help create a better regulatory framework and provide resources to the CFTC.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.