Rostin Behnam, Chairman of the Commodity Futures Trading Commission (CFTC), tried to dispel a narrative of turf warfare between his agency and the Securities and Exchange Commission (SEC) at a Rutgers Law and Wall Street Blockchain Alliance event in Manhattan on Monday. Behnam also revealed his thoughts on Bitcoin and the leading altcoin Ethereum.
Are the leading crypto and leading altcoin a commodity?
Rostin Behnam addressed an audience of lawyers and industry leaders. “It’s pretty cynical to suggest that the two agencies can’t figure this out and work together,” Behnam said. Crypto legislation has stalled in Congress, and it’s unlikely to pass as elections loom. That’s why regulators have engaged in a series of public talks and enforcement actions on where authority lies. In particular, the issue of which cryptocurrencies are commodities is an important issue. Also, there is the question of whether, unlike securities, it is subject to the oversight of the CFTC or the SEC. This created a perception of division between the two key institutions.
Behnam reiterated his belief that leading crypto Bitcoin and leading altcoin Ethereum are commodities. However, SEC Chairman Gary Gensler has raised questions about whether Ether will fall under the jurisdiction of the SEC due to its transition to a PoS consensus mechanism. “I have argued that Ethereum is a commodity. “I think otherwise,” said President Gensler. However, he dismissed the widespread industry feeling that the CFTC would be the more appropriate regulator. “Our app record speaks for itself,” he said.
“CFTC and SEC will continue to work together”
He also said that the Digital Commodities Consumer Protection Act, enacted by Senators Debbie Stabenow (D-Mich.) and John Boozman (R-Ark.) of the Senate Agriculture Committee, is widely the best crypto bill. Meanwhile, the bill does not give the CFTC full authority to classify cryptocurrencies.
Instead, he argued that the CFTC and SEC would continue to work together. He pointed to the two institutions’ collaborative track record in the development and evolution of their security futures. He said that the current self-certification process where platforms come to the CFTC to register should be sufficient for crypto participants, including when the question of exchange against the commodity is in doubt.
Rostin Behnam said, “This is the million dollar question. How do we engage with the SEC when a product is in the gray area?” said. She noted that the answer would be two bodies collaborating on legal and political questions to find a solution. However, it’s a result that many in the industry find insufficient. Especially given that none of the proposed bill is clear on categorizing cryptoassets.
“We are not doing enough!”
Legislation is needed, both to establish a regulatory framework and to provide resources to the agency, Behnam said. The CFTC recently released its implementation brief for fiscal year 2022, where more than 20% of its 82 actions are related to altcoin projects. Among them, he said, each is the result of a tip-off or complaint, as opposed to traditional surveillance mechanisms. He attributed this to being “handcuffed” by the agency’s lack of tools normally available in traditionally regulated markets. In this context, he made the following statement:
Fear and anxiety lie at the bottom. We are not doing enough. If we had more resources, we would be able to expose more fraud and manipulation.
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