Key Takeaways:
- CFTC Chair Rostin Behnam advocates for classifying most cryptocurrencies as commodities, not securities
- This categorisation of CFTC’s domain over commodities includes tangible goods like gold and oil.
The ‘securities vs commodities’ debate does seem to reach an end for the crypto world. The Commodity Futures Trading Commission (CFTC) is pushing to expand its jurisdiction over cryptocurrencies.
During a testimony before the U.S. Senate Committee on Agriculture, Nutrition, and Forestry, CFTC Chair Rostin Behnam asserted that Bitcoin, Ethereum, and other cryptocurrencies should be classified as commodities, not securities.
Rostin Behnam, the Chair of the CFTC, emphasized that a significant majority of crypto assets, estimated between 70% and 80%, are “non-securities.” This classification aligns with the CFTC’s domain over commodities, which includes tangible goods like gold and oil.
By classifying digital assets as commodities, the CFTC aims to bring a more consistent regulatory approach to the volatile crypto market. Behnam’s comments were made during a hearing focused on the oversight of digital commodities, highlighting the evolving nature of the digital asset market.
The ongoing debate between the CFTC and the U.S. Securities and Exchange Commission (SEC) over the classification of digital assets has been contentious. The SEC, under Chairman Gary Gensler, has taken a more critical stance towards cryptocurrencies, often treating them as securities.
Behnam calls to understand the importance of legal clarity, citing an Illinois court’s recognition of Bitcoin and Ethereum as commodities, which he believes is crucial for establishing regulatory certainty.
(SOURCE)
Behnam expressed his concern about the lack of a comprehensive legislative response to the growing number of digital asset scams affecting everyday Americans.
According to Behnam, the most significant action he has taken is to push for legislative measures that would empower the CFTC to oversee the digital asset market effectively.
Senator Debbie Stabenow, chair of the committee, has introduced a bill aimed at providing the CFTC with official regulatory oversight of the crypto industry. The proposed legislation focuses on centralized platforms like crypto exchanges rather than decentralized finance (DeFi) protocols.
Key provisions of the bill include requirements for capital reserves and cybersecurity compliance for digital asset service providers. Behnam outlined six essential components for a regulatory framework, which include:
- A principles-based oversight model.
- Appropriate funding for the CFTC.
- Legislative authority for comprehensive disclosure requirements about commodity tokens.
- Enhanced consumer protection measures.
- Market integrity safeguards.
- Strong enforcement mechanisms.
Over the past few years, the CFTC has actively pursued more than 135 digital commodity-related cases, resulting in billions of dollars in penalties and restitution. Behnam’s testimony underscores the CFTC’s commitment to protecting consumers and maintaining market integrity through rigorous enforcement and compliance measures.
