CFTC Chairman shares his thoughts on crypto regulations.
CFTC Chairman Rostin Behnam recently stressed the difficulty of classifying crypto, noting that they have to rely on 70-year-old case law to determine what’s a security or commodity.
For some time, the cryptocurrency community in America and beyond has called for regulatory clarity in the cryptocurrency industry. The American regulatory scene has provided room for uncertainty that has led to a battle of supremacy between top regulators, the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC).
This uncertainty on which watchdog gets a say emanates from the inability of the United States to determine which crypto asset is a commodity and which is security. CFTC Chair Behnam has stressed this difficulty, recently noting a reliance on 70-year-old case law.
Rostin Behnam made these remarks while speaking on a CNBC Squawk Box episode. “We have to rely on 70-year-old case law to determine what’s a security or a commodity. We have one case in New York that says Bitcoin is a commodity,” Behnam said when asked if BTC and Ether are securities.
"We have to rely on 70 year old case-law to determine what's a security or a commodity. We have one case in New York that says #Bitcoin is a commodity," says @CFTCbehnam on regulating #crypto. "We're trying to find a reasonable outcome that will create certainty for the market." pic.twitter.com/0fR6SVo3re
— Squawk Box (@SquawkCNBC) September 28, 2022
He pointed out the novelty of digital assets and their unique characteristics compared to traditional risk assets. According to Behnam, this has made it difficult to classify crypto assets. “We’re trying to find a reasonable outcome that will create certainty for the market,” he concluded.
According to Behnam, the CFTC and SEC get along despite the patent battle of supremacy. Nonetheless, he highlighted the difficulty of the CFTC is limited oversight.
“For us, the CFTC, the difficulty is: we are a derivatives regulator – we don’t oversee cash markets. So the authority that I’ve been asking Congress for is cash authority so that we can go into the Bitcoin cash market, the Ether cash market, and the other digital tokens,” Behnam mentioned.
Behnam noted that the SEC and the CFTC are not fighting a turf war. He rather mentioned that the public is witnessing a case of two regulators attempting to come up with a reasonable outcome that can balance out market certainty and consumer protection.
Recall that SEC Chair Gary Gensler previously noted that he supports Congress granting the CFTC authority over Bitcoin, Ether, and other non-security digital assets, as reported by The Crypto Basic. However, Gensler noted that the CFTC would get his support if the SEC regulates cryptocurrencies it considers securities.
Despite Gensler’s comments, the crypto community remains concerned, as the SEC Chair has shown a habit of classifying several digital assets as securities. Notable lawyer John Deaton expressed his fear of the SEC classifying Ether as security following its switch to PoS. Gensler also previously insinuated that PoS tokens have the characteristics of securities.
Sometime in June, Gary Gensler remarked that Bitcoin is the only cryptocurrency he can comfortably classify as a commodity.