CFTC Chief Says Ethereum Is a Commodity – Despite Gensler’s ‘Bitcoin Only’ Position
by James · March 8, 2023
The chairman of the Commodities and Futures Trading Commission (CFTC) has taken a firm stance against the Security and Exchange Commission’s (SEC) subtle power creep over the digital asset market.
Rostin Behnam told the Senate Agriculture Committee on Wednesday that Ethereum, the second largest cryptocurrency after Bitcoin, is a commodity.
“It has been listed on CFTC exchanges for quite some timeand for that reason” so Behnam, who argued that it creates a “direct jurisdictional hook” for the agency to monitor both ETH’s derivatives market and underlying market.
His opinion appears to be in direct conflict with SEC Chairman Gary Gensler, who argued last month that “everything but Bitcoin” falls under securities laws. While not naming any names, the chairman has hinted many times that this will include Ethereum – especially after the network transfered to a proof of stake consensus mechanism.
Under the Howey test, a security counts as an asset sold to raise money from the public, which they expect to profit based on the efforts of others. Gensler’s own words reinforced this in January 2022. But below the Securities Actthe definition can be much broader.
Comments in late November suggested that Behnam had agreed with the SEC chief that Ethereum fell under this umbrella, but his argument on Wednesday shows that he is standing by his longstanding position that there is room for more than one cryptocurrency.
“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 elaborated, stating that his agency has “serious legal defenses” to support their case.
The regulatory chiefs also disagree about stablecoins. While the SEC recently threatened to sue Paxos for issuing BUSD as an unregistered security, Behnam believes that stablecoins should be considered commodities – absent legislation to claim otherwise.
Behnam cited an investigation into Tether during a 2021 lawsuit, after which Tether agreed to pay over $40 million to settle allegations 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 that we needed to move forward, and quickly, to monitor that market,” he said.
