CFTC Chair Argues for Oversight of Bitcoin and Ether as Commodities

Two of the biggest cryptocurrencies by market capitalization, Bitcoin and Ether, are commodities and should be under his agency’s control, the head of United States commodities regulators has said.

Court Decision and Regulatory Difficulties

Speaking on July 9 before the US Senate Committee on Agriculture, Nutrition, and Forestry, Commodity Futures Trading Commission (CFTC) Chair Rostin Behnam reiterated Bitcoin and Ether as commodities citing a recent Illinois court finding. Part of a $120 million Ponzi case, the decision included classifications of Olympus (OHM) and KlimaDAO (KLIMA) as commodities.

“In its ruling, the court reiterated that under the Commodity Exchange Act, Bitcoin and Ether are commodities” Behnam stated.

Behnam also mentioned a 2022 Financial Stability Oversight Council (FSOC) study showing regulatory flaws in the spot market for digital assets not classed as securities. To reduce hazards to financial markets and investors, he underlined the importance of his agency taking more control over digital commodities.

Legislative Priorities and Collaboration

Behnam outlined five legislative priorities to enhance the regulation of digital commodities:

1. Tailoring rules to meet the unique risk profile of cryptocurrencies.
2. Establishing a permanent “fee-for-service” funding model.
3. Requiring registrants to adhere to a comprehensive disclosure regime regarding their crypto assets.
4. Strengthening KYC and AML capabilities for the CFTC.
5. Developing a balanced framework for classifying tokens as commodities or securities under existing law, along with a comprehensive education and outreach program on crypto assets in the US.

“The SEC and CFTC have a longstanding partnership that facilitates strong, robust regulation of securities and derivatives markets” Behnam noted. “I am confident that the two agencies will continue working closely, ensuring a reliable, fair, and efficient system for listing and trading digital assets on regulated exchanges.”

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