CFTC Chairman reaffirms Bitcoin and Ethereum as commodities in Senate testimony

TLDR

CFTC Chairman Rustin Behnam reiterated to the US Senate that Bitcoin and Ethereum are commodities. A recent Illinois court ruling classified Bitcoin and Ethereum as commodities under the Commodity Markets Act. Behnam argues that the CFTC should have regulatory oversight of Bitcoin and Ethereum to protect investors. The CFTC chairman has outlined five legislative priorities for better regulation of digital commodities. While this court decision is relevant, it is not legally binding on other courts or jurisdictions.

In recent testimony before the US Senate Agriculture, Food and Forestry Committee, Commodity Futures Trading Commission (CFTC) Chairman Rostin Behnam confirmed his position that Bitcoin and Ethereum should be classified as commodities.

This classification places these cryptocurrencies under CFTC regulatory oversight.

Behnam's argument received support from a July 3 decision by an Illinois district court.

The case involved a $120 million Ponzi scheme, and the judge ruled that both Bitcoin and Ethereum qualify as commodities under the Commodity Markets Act. This judgment extends to the lesser-known cryptocurrencies Olympus (OHM) and KlimaDAO (KLIMA).

Today I testified before the Senate Agriculture Committee about digital commodity assets. Read my review on

— Rostin Behnam (@CFTCbehnam) July 10, 2024

The chairman of the CFTC emphasized the need for federal legislation to create a regulatory framework for digital assets. “Our current trajectory is not sustainable.

Federal legislation is urgently needed to create a regulatory framework that protects American investors, and perhaps the financial system, from future risks.

To address these concerns, Behnam outlined five key legislative priorities for the agency.

Tailoring rules to meet the unique risk profile of cryptocurrencies Establishing a permanent “fee-for-service model” funding structure Require registrants to comply with comprehensive information disclosure systems regarding Know Your Customer (KYC) and Anti-Money Laundering (AML). ) Ability to develop a framework to determine whether tokens are commodities or securities under current law

Behnam cited a 2022 report from the Financial Stability Oversight Council, which highlighted regulatory gaps in the spot market for “unsecured digital assets.”

BTC and ETH are commodities. pic.twitter.com/HKzgkRaWkn

— Dan (@DN_Founder) July 10, 2024

This report suggests that the CFTC should play a greater role in regulating digital products.

While Behnam's testimony and the Illinois court decision are seen as positive developments by some in the crypto community, it's important to note that this court decision is not legally binding on other courts or jurisdictions.

Anthony Tu-Sekin, a partner at Seward & Kissel, explained that decisions made at the trial court level are not binding on other courts in that jurisdiction.

The classification of cryptocurrencies, particularly Ethereum, has been a topic of debate among regulators. While the CFTC has considered Ethereum a commodity since 2019, the Securities and Exchange Commission (SEC) has not made its position clear.

However, the SEC's approval of the Spot Ethereum ETF in May 2024 was seen by some as an implicit acknowledgment of Ethereum's commodity status.

Behnam also emphasized the importance of cooperation between regulatory agencies.

“The SEC and CFTC have a long-standing partnership that facilitates strong, robust oversight of the securities and derivatives markets. I am confident that the two agencies will continue to work closely together.