Stablecoins and Ether are going to become commodities, CFTC chief confirms

Stablecoins and Ether (ETH) are commodities and should be subject to the United States Commodity Futures Trading Commission (CFTC), the chairman has again argued during a recent Senate hearing.

During the Senate Agriculture hearing on March 8, CFTC Chairman Rostin Behnam was asked by Senator Kirsten Gillibrand about the differing views of the regulator and the Securities and Exchange Commission (SEC) following the CFTC’s 2021 settlement with stablecoin issuer Tether, Behnam said:

“Despite a regulatory framework around stablecoins, they are going to be commodities in my view.”

“It was clear to our enforcement team and the commission that Tether, a stablecoin, was a commodity,” he added.

In the past, the CFTC has argued that certain digital assets such as Ether, Bitcoin (BTC) and Tether (USDT) were commodities – for example in the lawsuit against FTX founder Sam Bankman-Fried in mid-December.

Asked what evidence the CFTC would present to win regulatory influence over Ether during the Senate hearing, Behnam said it “would not have allowed” Ether futures products to be listed on CFTC exchanges if it “did not feel strongly that it was a commodity asset” and added:

“We have lawsuit risk, we have agency credibility risk if we do something like this without serious legal defenses to support our argument that [the] asset is a commodity.”

The comment apparently cemented Behnam’s sometimes wavering opinion on the classification of Ether. During an invitation-only event at Princeton University last November, he said that Bitcoin was the only cryptocurrency that could be seen as a commodity, leaving out Ether. Just a month before that, he suggested that Ether could also be seen as a commodity.

Related: The CFTC continues to explore digital asset policy considerations in the MRAC meeting

Behnam’s latest comments contradict a view held by SEC Chairman Gary Gensler, who argued in a February 23 New York Magazine interview that “everything but Bitcoin” is a security, a claim rejected by several crypto advocates.

The differing viewpoints of market regulators could set the stage for a conflict as each vie for regulatory control of the crypto industry.

In mid-February, the SEC flexed its authority against stablecoin issuer Paxos, saying it may sue the firm for violating investor protection laws and alleging that the Binance USD (BUSD) stablecoin is an unregistered security.

Around the same time, the regulator similarly targeted Terraform Labs, calling its algorithmic stablecoin TerraUSD Classic (USTC) a security, a move Delphi Labs’ general counsel, Gabriel Shapiro, said could be a “roadmap” for how the SEC might structure future lawsuits against other stablecoins – issuers.

The SEC’s crypto crackdowns have seen backlash on the industry front, with Circle founder and CEO Jeremy Allaire saying he doesn’t believe the “SEC is the regulator of stablecoins” and saying they should be overseen by a banking regulator.