The chairman of the Commodities and Futures Trading Commission (CFTC) has taken a strong stance against the Security and Exchange Commission’s (SEC) subtle takeover of power over the digital asset market.
Rostin Behnam told the Senate Agriculture Committee on Wednesday that Ethereum, the second largest cryptocurrency next to Bitcoin, is a commodity.
“It has been listed on CFTC exchanges for quite some timeand for that reason,” said Behnam, who argued that it creates a “direct jurisdictional hook” for the agency to control both the ETH derivatives market and the underlying market.
His view seems to contradict that of SEC Chairman Gary Gensler, who argued last month that “everything but Bitcoin” falls under securities laws. While not naming names, the chairman has often hinted that this would include Ethereum, especially after the network switched to a proof-of-stake consensus mechanism.
Under the Howey test, a security counts as an asset sold to raise money from the public, from which they expect profit based on the efforts of others. Gensler’s own words reinforced this in January 2022. However, under the securities lawthe definition can be much broader.
Comments suggested in late November that Behnam had come to an agreement with the SEC chief that Ethereum fell under this umbrella, but his argument Wednesday shows he’s sticking to his long-held stance that there’s room for more than one crypto commodity.
“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,” he explained, stating that his agency has “serious legal defenses” to support their cause.
The regulators also disagree on stablecoins. While the SEC recently threatened to sue Paxos for issuing BUSD as an unregistered security, Behnam believes that stablecoins should be considered a commodity, without any legislation stating otherwise.
Behnam cited an investigation into Tether in a 2021 lawsuit, after which Tether agreed to pay more than $40 million to settle charges that it had lied about its dollar reserves.
“As we investigated the circumstances surrounding the Tether case, it was clear to our enforcement team and the commission that the Tether stablecoin was a commodity and we had to move fast to monitor that market,” he said.
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