CFTC Chair Deems Bitcoin and Ethereum As Commodities

Rostin Behnam, chairman of the US Commodities Futures Trading Commission (CFTC), has reiterated his stance on digital assets.During a testimony on July 9, the CFTC chief argued that his agency should be allowed to oversee Bitcoin and Ethereum as commodities.

Behnam's remarks come after an Illinois judge recently ruled in favour of the CFTC in a fraud case. The court ruling explicitly stated that Ethereum and Bitcoin are commodities.

CFTC Demands Regulatory Oversight on Bitcoin and Ethereum

In a July 3 court ruling, an Illinois District Court judge sided with the CFTC and ruled that Bitcoin and Ethereum qualify as commodities. This ruling was part of a fraud case in which a man named Sam Ikkurty from Oregon allegedly orchestrated a $120 million Ponzi scheme.

The court also named two other unpopular cryptocurrencies, Olympus (OHM) and KlimaDAO (KLIMA), commodities.

Following this ruling, Behnam, the CFTC chair, testified before the US Senate Committee on Agriculture, Nutrition, and Forestry on July 9. During his testimony, Behnam cited the Illinois court ruling stating that Bitcoin and Ethereum are commodities.

He argued that the CFTC should oversee the two cryptocurrencies as commodities since the court has already confirmed it.

Behnam remarked: In its decision, the court reaffirmed that both Bitcoin and Ethereum are commodities under the Commodity Exchange Act."

The regulator further cited a 2022 report from the Financial Stability Oversight Council. According to Behnam, the report highlighted a regulatory gap in the spot market for digital assets that are not securities.

Following his citations, Behnam requested that the CFTC be given more authority on digital assets oversight to fill the regulatory gap.

Further, Behnam believes that a lack of oversight will suppress public interest in crypto assets, resulting in greater risks for investors and the broader market.

He also describes the current trajectory as unsustainable and highlights the urgency of federal legislation introducing a regulatory framework to protect American investors from future risk.

Additionally, Behnam acknowledged the growing popularity and mainstream adoption of digital assets in the United States and called for a comprehensive education to enable the investing public to understand the opportunities and risks associated with cryptocurrency.

Behnam Acclaims the CFTC's Readiness to Oversee Cryptocurrencies

The CFTC chairman encouraged the Committee to consider a balanced, disciplined framework for determining which tokens are securities or commodities under existing laws.

He expressed confidence that collaboration between the SEC and CFTC will ensure robust regulation of the derivatives and securities markets.

In addition, Behnam said the alliance between both agencies will ensure a reliable, fair, and efficient system for listing and trading cryptocurrencies on regulated exchanges.

Finally, the regulator commended the Committee's longtime efforts to fill the regulatory gap while prioritizing investor protection and market stability. He acknowledged the vital steps Congress has taken to address the issue of digital assets commodity market regulation.

However, Behnam noted an urgent need to fill the harmful regulatory gap" to protect American investors better.

He suggested legislation to provide authority for anti-money laundering, customer identification, and know-your-customer programs designed on the existing guidelines for market participants.

Also, Behnam requested that the CFTC be given legislative authority to mandate service providers to provide a comprehensive disclosure regime" about a commodity token's structure, purpose, market-based characteristics, and risks. This will ensure that investors can access sufficient information before investing in a digital asset.

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