CFTC Chair Reaffirms Bitcoin and Ethereum as Commodities in Recent Testimony

The head of the United States commodities regulator has once again asserted that Bitcoin and Ether, the two leading cryptocurrencies by market capitalization, should be classified as commodities, advocating for his agency’s oversight.

On July 9, while addressing the US Senate Committee on Agriculture, Nutrition, and Forestry, Commodity Futures Trading Commission (CFTC) Chair Rostin Behnam referenced a recent Illinois court decision which reaffirmed Bitcoin and Ether’s status as commodities.

This decision, dated July 3, emerged from a $120 million Ponzi scheme case involving an Oregon resident accused of fraud. The Illinois district court judge’s ruling affirmed that both cryptocurrencies qualify as commodities.

The court also recognized Olympus (OHM) and KlimaDAO (KLIMA) as commodities.

“In its decision, the court re-affirmed that both Bitcoin and Ether are commodities under the Commodity Exchange Act.” Moreover, Behnam pointed to a 2022 Financial Stability Oversight Council report, which identified a regulatory gap in the spot market for “digital assets that are not securities” and recommended enhanced oversight by his agency for digital commodities.

Behnam emphasized that the lack of action from other US regulators would not “quash public interest for digital assets” and warned it would only increase risks to financial markets and investors.

“In short, our current trajectory is not sustainable. 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,” he stated.

Behnam says the CFTC is ready to enforce crypto rules.

The CFTC chair presented five legislative priorities to improve the regulation of digital commodities.

These priorities included the ability to tailor rules to the unique risks of cryptocurrencies, establishing a permanent “fee-for-service model” funding approach, mandating registrants to follow a “comprehensive disclosure regime” concerning their crypto assets, and enhancing the CFTC’s Know Your Customer and Anti-Money Laundering capabilities.

Finally, Behnam urged the committee to develop a “disciplined, balanced framework” to determine whether tokens are commodities or securities under current laws and to promote a comprehensive education and outreach program about crypto assets in the US.

“The SEC and CFTC have a longstanding partnership that facilitates strong, robust regulation of securities and derivatives markets,” Behnam said.

“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.”

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