The power tussle between the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) over who is the top crypto cop on the beat continues to confuse investors.
In line with the tug-of-war between the two American regulators, CFTC chairman Rostin Behnam has reaffirmed that Ether is a commodity — not a security like his SEC counterpart says.
CFTC’s Behnam Calls Ether A Commodity
Ethereum, the world’s second-largest cryptocurrency next to bitcoin, should come under the purview of the CFTC.
Chairman Rostin Behnam told the Senate Agriculture Committee on Wednesday that Ether is a commodity.
“It’s been listed on CFTC exchanges for quite some time, and for that reason,” said Behnam, who contended that it creates a “direct jurisdictional hook” for the commission to oversee both ether’s derivatives market and the underlying market.
When quizzed about the evidence his agency would present to gain regulatory control over Ethereum during the Senate hearing, Behnam stated “we would not have allowed the Ether futures product to be listed on a CFTC exchange if we did not feel strongly that it was a commodity asset.” He added that the CFTC has “serious legal defenses” to support its argument that ether should be treated as a commodity.
Behnam’s viewpoint contradicts that of SEC boss Gary Gensler, who last month suggested that all tokens and coins other than bitcoin are subject to federal securities laws. Although he did not give any names, Gensler has previously implied that this would include ether — especially after it moved from being a proof-of-work network to a proof-of-stake one.
Stablecoins Are Also Commodities
The two regulatory heads also disagree on the legal status of stablecoins. The SEC recently sent a Wells Notice — a tool used by the agency to allege certain activity may be a breach of securities law and may mean the SEC intends to sue — to stablecoin issuer Paxos. Paxos’ notice was related to the firm’s issuance of Binance USD (BUSD) stablecoin. Conversely, Behnam believes stablecoins should be classed as commodities — sans any framework to claim otherwise.
The CFTC chair further referenced a probe into Tether during a lawsuit in 2021 when Tether agreed to cough up $41 million to settle allegations that the company had made misleading claims that it had sufficient dollar reserves.
“Examining the circumstances around the Tether case, it was clear to our enforcement team and the commission that the Tether stablecoin was a commodity, and that we needed to move forward, and swiftly, to police that market,” Behnam explained.
The conflicting opinions of the two watchdogs will likely intensify their rivalry as each vies for regulatory oversight of the digital asset market.