CFTC Chair Speaks on Ethereum (ETH), Stablecoins

The Commodity and Future Trading Commission (CFTC) Chair Rostin Behnam reiterated its view on March 8 that Ethereum (ETH) and stablecoins are commodities that should be under the jurisdiction of its agency as per report. 

CFTC Chair Behnam tripling down on Ether being a commodity and stablecoins also being commodities, contra SEC Chair Gensler's interview in NY Mag. Rare to see this level of interagency disagreement in public.

— Justin Slaughter (@JBSDC) March 8, 2023

Behnam remarked while answering a couple of questions asked by Senator Kristen Gillibrand during the Senate Agricultural hearing. 

He maintained that regardless of the regulatory frameworks around stablecoins, they are best classified as commodities that should be overseen by the CFTC agency. 

In Dec., the CFTC argued in a lawsuit filed against FTX founder Sam Bankman-Fried (SBF) that digital assets such as Ethereum, Bitcoin (BTC), and Tether (USDT) among others should be treated as commodities.

According to the CFTC, as per their filing today, ETH is a commodity. This really should put any security designation to rest. pic.twitter.com/PkHWredNK4

— Hal Press (@NorthRockLP) December 13, 2022

Regarding the premises that the CFTC will provide to back-up the claim. Behnam revealed that the agency would not have allowed Ether future products to be listed on CFTC Exchanges if it has no conviction that it is a commodity asset. 

Meanwhile, the view of Behnam contradicts the view of SEC chair, Gary Gensler, who asserted on Feb. 23 that everything aside Bitcoin could be classified as a security. 

This is a pretty stark (almost impassioned?) rebuke of the ‘everything except BTC is a security’ and ‘stablecoins are securities’ positions. Would be great if the CFTC released the legal analysis on these issues Chairman Behnam says it did. https://t.co/RIeTgUxTFd pic.twitter.com/LGtuEPs4X3

— Lawtoshi (@lawtoshi) March 8, 2023

Given the fact that each regulator is jostling to exert control over digital assets, the contrasting views on the classification of digital assets remain an imminent conflict.

Pathways for Crypto Laws

More than any other time, statutory laws governing the crypto industry should be defined instead of contradictory proclamations by regulatory agencies. 

Recently, the SEC clamped down on BUSD stablecoin issuer Paxos for allegedly violating investor protection laws. 

While Paxos had ceased to further mint BUSD, Circle founder and CEO Jeremy Allaire reacted that SEC is not empowered to regulate stablecoins as it merely exists as a banking regulator.

A comprehensive law regulating crypto firms and clearly stating the agencies empowered to execute the laws should be enacted. The crypto industry is at an infant stage, and efforts should be geared towards growing it.