- CFTC Chairman Rostin Behnam clarifies Bitcoin and Ethereum are commodities, suggesting less strict regulatory oversight.
- Illinois district court ruling places Bitcoin and Ethereum under CFTC’s jurisdiction, not SEC’s, based on CEA.
In recent remarks before the Senate Agriculture Committee, Commodity Futures Trading Commission (CFTC) Chairman Rostin Behnam stated that a portion of the cryptocurrency market, including prominent currencies like Bitcoin and Ethereum, does not fall under the category of securities. This declaration introduces a potential shift in regulatory oversight, which traditionally has been more stringent for securities.
Behnam’s assertion stems from a recent judgment by an Illinois district court that classified Bitcoin and Ethereum as commodities, placing them within the CFTC’s regulatory scope according to the Commodity Exchange Act (CEA).
“If you measure the Bitcoin economy by market cap, 70-80% of assets are non-securities, meaning there is no direct federal oversight”.
This decision marks a clear divergence from the SEC approach, which has often treated digital assets as securities based on the Howey test. This test assesses whether an arrangement involves an investment in a common enterprise with expectations of profits predominantly from the efforts of others.
SEC Chairman Gary Gensler maintains that many cryptocurrencies fulfill the Howey test’s criteria, necessitating SEC oversight. This stance has led to comprehensive regulatory engagement with various cryptocurrency ventures, advocating for compliance with securities regulations.
Behnam, contrasting with the SEC’s view, suggests that the bulk of cryptocurrencies, by market cap, do not involve securities transactions, thus warranting less rigorous federal regulation.
” Last week, a district court in Illinois entered summary judgment in favor of CTFC in a case involving fraud by an unregistered entity that promised steady returns in digital assets such as Bitcoin and Ether. In its decision, the court reaffirmed BTC and ETH are commodities under CEA (Commodities Exchange Act).”
He urged Congress to address cryptocurrency regulation promptly, cautioning that a lack of action could risk investor protections and diminish the United States’ competitive edge in the burgeoning digital asset space.
The implications of recognizing Bitcoin and Ethereum as commodities could lessen regulatory barriers for these and similar digital assets, potentially fostering more robust market activity and innovation.
The perspective has been warmly received by figures in the cryptocurrency sector. For instance, HEXscout, a manager for Hex and PulseChain, praised the court’s ruling on social media, heralding it as a vital advancement for the cryptocurrency community.
