The debate surrounding the legal classification of cryptocurrencies continues to intensify within the crypto industry. Rostin Behnam, the Chair of the Commodity Futures Trading Commission (CFTC), recently emphasized the importance of monitoring Bitcoin and Ether, two leading cryptocurrencies in terms of market capitalization, during his testimony before the US Senate Committee on Agriculture, Nutrition, and Forestry on July 9.
Behnam referenced a significant court decision from Illinois in his testimony, which deemed Bitcoin and Ether as commodities within the context of a $120 million Ponzi scheme involving an individual from Oregon accused of fraud. This ruling, issued on July 3, also classified Olympus (OHM) and KlimaDAO (KLIMA) as commodities. Behnam highlighted that, according to the Commodity Exchange Act, Bitcoin and Ether fall under the category of commodities.
In light of regulatory gaps identified in a 2022 report by the Financial Stability Oversight Council (FSOC), Behnam stressed the need for the CFTC to play a more substantial role in overseeing digital commodities that are not considered securities. He cautioned that delays in regulatory action by other US agencies could heighten risks to financial markets and investors, rather than reducing public interest in digital assets.
Behnam outlined five key legislative priorities for better regulating digital commodities, including modifying regulations to suit the unique risk profiles of cryptocurrencies, implementing a permanent “fee-for-service model” for funding agency operations, mandating comprehensive disclosure policies for registrants in relation to their crypto assets, enhancing Know Your Customer (KYC) and Anti-Money Laundering (AML) protocols under CFTC oversight, and adopting a disciplined approach to classifying tokens as commodities or securities.
Moreover, Behnam emphasized the importance of conducting a thorough education and outreach campaign to increase public awareness of US crypto assets. He also highlighted the longstanding collaboration between the SEC and the CFTC in regulating securities and derivatives markets, underscoring the need for continued cooperation to ensure a fair and efficient system for listing and trading digital assets on regulated exchanges within the crypto industry.
