The ongoing debate surrounding cryptocurrency regulation in the United States has been reignited by the Commodity Futures Trading Commission (CFTC) Chair Rostin Behnam. In his testimony before the US Senate Committee on Agriculture, Nutrition, and Forestry on July 9th, Behnam reiterated his stance that Bitcoin and Ether, the two leading cryptocurrencies by market capitalization, should be classified as commodities and overseen by the CFTC.
Behnam cited a July 3rd Illinois court ruling in a $120 million Ponzi scheme case as evidence supporting his position. The judge presiding over the case, which involved an Oregon man accused of fraud, classified both Bitcoin and Ether as commodities. Additionally, the ruling included Olympus (OHM) and KlimaDAO (KLIMA) under the same classification.
“In its decision, the court re-affirmed that both Bitcoin and Ether are commodities under the Commodity Exchange Act,” Behnam emphasized during his testimony.
Behnam further bolstered his argument by referencing a 2022 report by the Financial Stability Oversight Council (FSOC). This report identified a critical gap in regulations pertaining to the spot market for “digital assets that are not securities.” The FSOC report called for the CFTC to take on a more prominent role in overseeing digital commodities.
Behnam expressed his concern that the lack of concrete action from other regulators would not deter public interest in digital assets. He warned that continued inaction would only exacerbate the risks faced by financial markets and investors.
“In short, our current trajectory is not sustainable,” Behnam declared. “Federal legislation is urgently needed to create a pathway for a regulatory framework that will protect American investors and possibly the financial system from future risk.”
CFTC Ready to Take the Lead on Crypto Regulation
Behnam outlined five key legislative priorities that the CFTC believes would enable them to effectively regulate digital commodities. These priorities include:
- The authority to tailor regulations to address the unique risk profiles of various cryptocurrencies.
- The establishment of a permanent “fee-for-service model” funding system for the CFTC.
- A requirement for registered entities to adhere to a comprehensive disclosure regime regarding their crypto asset holdings.
- The strengthening of Know Your Customer (KYC) and Anti-Money Laundering (AML) protocols for the CFTC.
Behnam concluded his testimony by urging the committee to consider a “disciplined, balanced framework” for differentiating between securities and commodities when classifying tokens under existing laws. He also highlighted the importance of implementing a comprehensive educational and outreach program to enhance public understanding of crypto assets within the United States.
“The SEC and CFTC have a longstanding partnership that facilitates strong, robust regulation of securities and derivatives markets,” Behnam reassured the committee. “I am confident that the two agencies will continue working closely, ensuring a reliable, fair, and efficient system for listing and trading of digital assets on regulated exchanges.”
