- CFTC chairperson Rostin Behman has reiterated that cryptocurrencies like Ether, and stablecoins, should fall under his department for regulation.
- His statements directly oppose SEC chairperson Gary Gensler, who believes everything but Bitcoin is a security.
- Behman did not back down when questioned on the “competition for oversight” that appears to be brewing.
The move by the SEC seeking jurisdiction over the crypto market has run into resistance through an inter-agency disagreement on the regulatory nature of coins other than Bitcoin.
Behnam’s stance contrasts directly with SEC chairperson Gary Gensler, who argued in February that “everything other than Bitcoin” falls under securities laws.
Gensler’s statement about the SEC’s broad jurisdiction was posed to Behnam, but the CFTC chairperson countered. Behnam cited previous arguments and cases he has handled on crypto within his department to justify the CFTC’s claim to regulate crypto as a commodity.
Not All Assets Are Simply Securities
The CFTC referred to Bitcoin, Ethereum, and Tether as commodities in its lawsuit against former FTX CEO Sam Bankman-Fried.
“I have made the argument that Ether is a commodity. It has been listed on CFTC exchanges for quite some time, and for that reason, it creates a very direct jurisdictional hook for us to police,” Behnam stated.
The CFTC Chair was quizzed further about the “competition for oversight” that appears to be emerging between the SEC and the CFTC, and Behnam made it clear that he was not ready to back down.
“We thought very deeply and thoughtfully about: what is the product, and does it fall into the commodity regime or the security regime. We would not have allowed the product – Ether futures products – to be listed on a CFTC exchange if we did not feel strongly that it was a commodity asset.” He underlined.
Behnam’s experience dealing with Ether futures products also extends to Stablecoins, where he reiterated his point about these assets being commodities.
CFTC’s Stablecoin Situation
Stablecoins have recently been in the spotlight after Paxos was issued a Wells Notice by the SEC in February. However, the BUSD situation was not the first such case. In October 2021, there was a case against Tether and USDT by the CFTC.
Leading up to the event, Behnam revealed the CFTC’s investigation into Tether, after which the stablecoin company agreed to pay $42 million to settle the charges that it had lied about its dollar reserves.
“Colleagues may have a different opinion, but we have done the legal analysis in examining the circumstances around the Tether case,” he explained, proclaiming that stablecoins are commodities.
“There is a larger question about what direction stablecoins should be going, in terms of regulation, and I agree stablecoins should be prudentially regulated financial instruments. Notwithstanding a regulatory framework, they are going to be commodities,” Behnam added.
On the Flipside
- Behnam still reserves significant concern over the “Wild West” of crypto. When asked to describe on a scale of 1-10 how concerned he was about the crypto market, he replied: “7 and a half.”
Why You Should Care
It is rare for such interagency disagreement to be aired publicly, as both the SEC and CFTC vie for jurisdiction over crypto. Experts are concerned that this could lead to further confusion and less clarity for crypto-related companies trying to comply with the as-yet unclear guidelines.
Read about when the CFTC first labeled BTC, ETH, and USDT as commodities:
CFTC Calls BTC, ETH, and USDT Commodities in FTX Court Filing
Read more about Gary Gensler’s thoughts on crypto companies not complying:
SEC’s Gensler Slams Crypto Companies: “Path to Compliance Is Clear”