KEY POINTS
- The SEC and the CFTC is reportedly on a "turf war" over who gets to regulate the crypto industry
- Behnam had previously said Ethereum and stablecoins are commodities
- SEC's Gensler said all crypto assets except Bitcoin are securities
The chairman of the Commodities Futures Trading Commission has said most crypto assets are commodities under existing laws, while admitting that there is a "turf war" going on between regulatory bodies on who gets to regulate the cryptocurrency industry.
On CNBC's "Squawk Box," CFTC Chair Rostin Behnam acknowledged that "under existing law, many of the tokens constitute commodities" – a declaration that offers some regulatory clarity on the status of crypto assets in the U.S.
"It is figuring out how existing, decades-old law, fits into this new technology that seems to be changing and ultimately needs a new way of thinking around policy and legislating," says @CFTCbehnam on #crypto. "Under existing law, many of the tokens constitute commodities." pic.twitter.com/F3JPjWq3wG
— Squawk Box (@SquawkCNBC) December 12, 2023
Referring to the regulatory complexities the crypto industry is facing, the CFTC chair stressed the need for urgent legislative action, saying that "members in Congress are trying to figure out the landscape."
The U.S. remains one of the top countries, along with Australia and Brazil, for cryptocurrency, but the lack of regulatory clarity and incessant enforcement actions on crypto businesses are major factors that discourage enterprises to continue doing business in the region.
Behnam points out that one of the challenges in regulating digital assets is the ongoing "turf war" among various regulatory bodies in the country, particularly between the Securities and Exchange Commission (SEC) and the CFTC over who will regulate the industry.
This conflict has become a major hurdle in establishing clear regulatory guidelines for digital assets and the broader crypto industry.
Behnam's opinion on crypto regulation varies from that of SEC Chair Gary Gensler, who has consistently maintained that crypto intermediaries are transacting in securities and insisted they should be under the SEC's purview.
When asked about this issue, Behnam said he has a positive working relationship with the SEC, noting that both agencies share the same interest in protecting the U.S. markets, the country's financial ecosystem and the consumers.
At a Senate Agriculture Committee hearing in March, Behnam said various digital assets, including Ethereum and stablecoins, are commodities.
The CFTC chairman said that "it's been listed on CFTC exchanges for quite some time, and for that reason, it creates a direct jurisdictional hook" for the agency to oversee both ETH's derivatives market and the underlying market.
It was not the first time the CFTC had classified Ether and other crypto assets as commodities. The commission, in a lawsuit against FTX founder Sam Bankman-Fried in December 2021, asserted that Bitcoin, Ether and Tether are commodities.
Unlike Behnam, SEC's Gensler believes everything aside from Bitcoin is considered a security and should fall under the purview of the SEC.
"They might drop their tokens overseas at first and contend or pretend that it's going to take six months before they come back to the U.S. But at the core, these tokens are securities because there's a group in the middle and the public is anticipating profits based on that group," he said in February.
