In an interesting development, the U.S. Commodities and Futures Trading Commission (CFTC) exerted jurisdictional power over Ethereum and stablecoins while calling them commodities. With this, the CFTC sets a direct confrontation with the U.S. SEC which is keen to treat all cryptocurrencies, except Bitcoin, as securities.
Interestingly, the latest development also shows the non-alignment among US regulators to regulate the crypto space. Addressing the Senate Agriculture Committee on Wednesday, March 8, CFTC Chair Rostin Behnam said:
“Not withstanding that, they are a commodity, and we have to police that market without a clear direction from Congress that they’re some other type of asset. Based on the cases that we’ve brought around stablecoins, I think that there’s a strong legal argument that USDC and other similar stablecoins would be commodities”.
The CFTC chair added that the fiat-backed stablecoins don’t work with the expectation of profit and return to its holder. Thus, Behman was hinting that stablecoins shouldn’t fall in the category of securities.
Also, the CFTC chair cited the investigation into Tether during a 2021 lawsuit. After that, Tether agreed to pay $40 million in settlement charges.
CFTC Chair Calls Ethereum A Commodity
Not only stablecoin, but Behnam also stated that Ethereum, the world’s second-largest cryptocurrency and Bitcoin competitor, is also a commodity. He added: “It’s been listed on CFTC exchanges for quite some time, and for that reason,” it creates a “direct jurisdictional hook” for the CFTC to look after the Ethereum derivatives and underlying market.
“We would not have allowed the Ether futures product to be listed on a CFTC exchange if we did not feel strongly that it was a commodity asset,” added the CFTC chair. Furthermore, he added that his agency has “serious legal defences” to support their case.
Additionally, Rostin Behnam called out the Congress, seeking more clarity regarding the jurisdictional powers in regulating the crypto space. Behnam also demanded comprehensive regulatory legislation from Congress adding that enforcement alone is not enough to address the risks and consumer protection issues in crypto.
“And as our markets have proven, as our regulations have proven over many, many decades, comprehensive regulation can prevent fraud, can prevent manipulation, and can stabilize markets and ultimately protect customers,” he said.
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