March 21, 2023

CFTC Chairman Takes Firm Stance Against SEC’s Power Creep Over Digital Asset Market

The chairman of the Commodities and Futures Trading Commission (CFTC), Rostin Behnam, has taken a firm stance against the Security and Exchange Commission (SEC)’s subtle power creep over the digital asset market. Behnam told the Senate Agriculture Committee on Wednesday that Ethereum, the second-largest cryptocurrency next to Bitcoin, is a commodity.

“It’s been listed on CFTC exchanges for quite some time, and for that reason,” said Behnam, who argued that it creates a “direct jurisdictional hook” for the agency to police both ETH’s derivatives market and underlying market. His opinion appears to directly contradict that of SEC chairman Gary Gensler, who argued last month that “everything other than Bitcoin” falls under securities laws.

While not naming any names, the chairman has hinted many times that this would include Ethereum—especially after the network transitioned to Ethereum 2.0, which is expected to make the network more scalable and secure. Behnam’s comments come as the SEC has been ramping up its efforts to regulate the digital asset market, with Gensler recently calling for more authority to oversee the sector.

The CFTC and SEC have been at odds over the regulation of digital assets for some time, with the former arguing that cryptocurrencies are commodities and should be regulated as such, while the latter maintains that they are securities and should be regulated accordingly. The two agencies have also been at odds over the regulation of derivatives based on digital assets, with the CFTC arguing that it has jurisdiction over such products, while the SEC maintains that it has the final say.

Behnam’s comments are likely to further fuel the debate over the regulation of digital assets, with many in the industry calling for clearer guidelines and regulations to be put in place. While the CFTC and SEC continue to battle it out over the regulation of digital assets, the industry is likely to remain in a state of flux, with investors and traders unsure of what the future holds.

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