The regulatory environment surrounding cryptocurrencies in the United States has been fraught with ambiguity for some time. On March 8, the Chairman of the Commodity Futures Trading Commission (CFTC), Rostin Behnam, testified before the Senate Agricultural Committee that most stablecoins are commodities.
Curiously, he also includes Ethereum (ETH) in this group, and he adds that both of them are subject to the CFTC’s excessive regulatory authority.
The chair of the CFTC made the following statement about Ethereum:
“It’s been mentioned on CFTC exchanges for a long time, and for that reason.”
He went on to say that this fact creates a “direct regulatory hook” for the controller to look after both the derivatives market and the underpinning market for ETH.
The chair of the Commodity Futures Trading Commission’s current position is in contrast to statements made by the chair of the Securities and Exchange Commission (SEC), Gary Gensler, who stated that all cryptocurrencies, except Bitcoin, should be classified as securities.
In the past, the Chair of the Securities and Exchange Commission (SEC) has dropped hints that Ethereum should be classified as a security.
However, Behnam’s remarks (1) on Wednesday sparked a new discussion in the US crypto regulatory area, which is a positive development. In addition to this, he stated that the CFTC had “strong legal defenses” to back its position in this matter.
“We would not have permitted the Ether futures contract to be posted on a CFTC exchange if we did not strongly feel that it was a commodity asset,” stated Behnam.
CFTC Chair in Charge of Stablecoins
In addition, the Head of the Commodity Futures Trading Commission (CFTC), Rostin Behnam, used his jurisdictional authority over stablecoins by claiming that the majority of stablecoins are commodities. On Wednesday, Behnam made the following statement when addressing the Senate Committee on Agriculture:
“In spite of that, they are a commodity, and we are obligated to regulate that market without a specific directive from Congress stating that they are a different kind of asset.
I believe that there’s a strong legal case that USDC and other such stablecoins might be commodities, based on the instances that we’ve filed surrounding stablecoins, and I think that this argument can be supported by the cases that we’ve brought.
Behnam mentioned a probe into Tether that was related to a lawsuit filed in 2021. After that, Tether came to an agreement where they would pay a $40 million settlement penalty and admit that they had been deceived about the amount of Tether reserves that they had.
Behnam stated that there is no prospect of profit or return for those who possess stablecoins that are backed by fiat currency. “As far as I know,” he remarked.
Moreover, the chair of the CFTC asked members of Congress in the United States to pass some comprehensive regulation legislation. He went on to say that the existing regulation has a loophole and that stricter enforcement will not address the issue.
“And as our marketplaces have demonstrated, as our rules and regs have demonstrated over many, many decades, thorough legislation can detect fraud, can inhibit deception, and can normalize marketplaces and help safeguard customers,” he added.
In the past, several MPs, including Behnam, have supported implementing comprehensive crypto legislation. We can only hope that the United States Congress will provide more regulatory certainty in the year 2023.