CFTC Chair Rostin Behnam Reaffirms Bitcoin and Ethereum’s Commodity Status in Testimony

Jimmy Aki
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CFTC Chairman Rostin Behnam stated on July 10 that 70-80% of cryptocurrencies, including Bitcoin and Ethereum, are not securities but commodities, according to current regulations.

Rostin Behnam Testimony Contrast with US SEC’s view

Chairman Rostin Behnam delivered his testimony before the US Senate Committee on Agriculture, Nutrition, and Forestry, discussing the regulatory status of cryptocurrencies, particularly Bitcoin and Ethereum.

He highlighted that a recent legal development at an Illinois court’s decision reaffirms Bitcoin and Ethereum as commodities under the Commodity Exchange Act (CEA).

It should be noted that the July 3 Illinois court ruling referenced above pertained to a case involving Sam Ikkurty and his companies, who were accused of operating a cryptocurrency Ponzi scheme. 

The scheme allegedly promised investors consistent returns using digital asset commodities like Bitcoin, Ethereum, Olympus (OHM), and KlimaDAO (KLIMA).

Judge Mary M. Rowland ruled that the mentioned assets were cryptocurrencies that qualified as commodities under the CEA.

Meanwhile, Senator Roger Marshall questioned Chairman Behnam about the regulatory confusion between the CFTC and the Securities and Exchange Commission (SEC) regarding cryptocurrency classifications.

In response, Chairman Behnam expressed readiness to explore this option, emphasizing the CFTC’s proficiency in handling crypto-related matters.

However, he acknowledged the need for clearer definitions under existing regulatory frameworks to create smooth relations between SEC and CFTC policies.

The Chairman’s stance directly contrasts with the views expressed by Gary Gensler, Chairman of the SEC. Gensler has consistently argued that most cryptocurrencies should be classified as securities, which was perceived as one of the reasons for the delay in green lighting spot Ethereum ETF before the SEC’s approval of 19b-4 filings in May.

Rostin Behnam Previews Five Legislative Priorities for CFTC

The CFTC chair laid out five legislative priorities to improve the regulation of digital commodities.

He emphasized the importance of a principles-based oversight model tailored to the unique characteristics of digital assets. This approach ensures market integrity while allowing flexibility to meet evolving market trends.

Secondly, Rostin Behnam advocated a permanent fee-for-service funding model specifically assessed on digital asset registrants. This funding model would align with the responsibilities outlined in potential legislation, enabling adequate resource allocation for regulatory functions.

Thirdly, the chair highlighted the need for comprehensive disclosure requirements. These would mandate digital asset registrants to provide detailed information about the structure, purpose, market characteristics, and risks associated with commodity tokens.

Fourthly, he stressed the importance of robust anti-money laundering (AML) and know-your-customer (KYC) measures. These measures, built upon existing requirements, are essential for maintaining market integrity and preventing illicit activities within the digital asset space.

Lastly, the chair emphasized the necessity of a balanced framework for determining whether digital tokens should be classified as commodities or securities under existing laws.

The CFTC chair also proposed implementing public education and outreach efforts through the CFTC’s Office of Customer Education and Outreach. This initiative seeks to educate the broader public about the risks and opportunities associated with digital assets.

About Jimmy Aki PRO INVESTOR

Based in the UK, Jimmy is an economic researcher with outstanding hands-on and heads-on experience in Macroeconomic finance analysis, forecasting and planning. He has honed his skills having worked cross-continental as a finance analyst, which gives him inter-cultural experience. He currently has a strong passion for regulation and macroeconomic trends as it allows him peek under the global bonnet to see how the world works.