In the ongoing clash between regulatory bodies over the classification and regulation of the crypto industry, CFTC Chair Rostin Behnam has added fuel to the fire by stating that most crypto assets are commodities under existing laws.
However, Behnam also acknowledged the existence of a “turf war” between regulatory bodies regarding the oversight of the cryptocurrency industry.
CFTC And SEC Clash Over Crypto Regulation
In an interview with CNBC’s Squawk Box, Behnam highlighted that many tokens are considered commodities under current law, providing some regulatory clarity on the status of crypto assets in the United States.
A major challenge in regulating digital assets is the ongoing jurisdictional battle between regulators, particularly the SEC and CFTC. Behnam acknowledged this “turf war” and the negative impact it has had on the establishment of clear regulatory guidelines for the crypto industry as a whole.
Behnam’s perspective on crypto regulation differs from that of SEC Chairman Gary Gensler, who has consistently stated that crypto intermediaries are engaged in securities transactions and should be under the purview of the SEC.
Despite the clear differences between the heads of the US regulatory agencies, CFTC Commissioner Behnam expressed a positive working relationship with the SEC. Behnam emphasized their shared interest in protecting US markets, the financial ecosystem, and consumers.
However, the regulators’ actions have not been without controversy, as the industry has faced lawsuits and enforcement actions, particularly in the past year. This includes instances where the SEC has disregarded court rulings and judges’ orders that do not align with its stance on token classification, as seen in the case against Ripple Labs and XRP.
CFTC’s Behnam Stands Firm
As reported by Bitcoinist, during a Senate Agriculture Committee hearing in March, Behnam stated that various digital assets, including Ethereum (ETH) and stablecoins, are commodities. Behnam stated:
Notwithstanding a regulatory framework around stablecoins, they’re going to be commodities in my view… It was clear to our enforcement team and the commission that Tether, a stablecoin, was a commodity.
Behnam noted that Ethereum has been listed on CFTC exchanges for a considerable time, which establishes the agency’s jurisdiction over both ETH’s derivatives market and the underlying market.
The CFTC’s classification of ETH and other crypto assets as commodities is not new. In a lawsuit against FTX founder Sam Bankman-Fried in December 2021, the commission asserted that Bitcoin, Ethereum, and Tether are commodities.
In contrast, SEC Chair Gensler believes that everything aside from Bitcoin should be considered a security falling within the SEC’s purview.
Overall, the disagreement between the CFTC and the SEC regarding the regulatory status of crypto assets has implications for market participants, as it creates uncertainty and hampers the establishment of a comprehensive regulatory framework.
Resolving these regulatory tensions and fostering inter-agency cooperation will be critical to providing clarity and promoting investor protection in the rapidly evolving crypto industry, as well as fostering growth and innovation for both the industry and the United States.
According to data from CoinGecko, the global cryptocurrency market cap currently stands at $1.52 trillion. This figure represents a 2.2% decrease over the past 24 hours. However, when compared to one year ago, the market cap has surged by an impressive 78.25%, reflecting the continued growth and adoption of digital assets.
Bitcoin (BTC), the leading cryptocurrency, maintains its position as the largest player in the market. With a market cap of $805 billion, Bitcoin’s dominance stands at 53.23%.
Featured image from Shutterstock, chart from TradingView.com