Rostin Behnam, Leader of the Commodity Futures Trading Board (CFTC) at a Rutgers Law and Wall Street Blockchain Alliance event in Manhattan on Monday, sought to dispel a turf war narrative between his agency and the Securities and Exchange Board (SEC). Behnam also revealed his opinions about Bitcoin and the leading altcoin Ethereum.
Is the leading crypto and chairman altcoin a commodity?
Rostin Behnam addressed an audience of lawyers and industry heads. “It is highly cynical to suggest that the two agencies cannot work this out and work together,” Behnam said. Crypto legislation has stalled in Congress, and it’s unlikely to pass as elections loom. That’s why regulators have engaged in a series of public talks and enforcement moves about where authority lies. In particular, the issue of which cryptocurrencies are commodities is an important problem. Also, there is the question of whether securities are subject to the oversight of the CFTC or the SEC. This created a perception of division between two key institutions.
Behnam reiterated his belief that leading crypto Bitcoin and chairman altcoin Ethereum are commodities. However, SEC Leader Gary Gensler has raised questions about whether Ether will fall under the jurisdiction of the SEC due to its transition to a PoS consensus system. “I have argued that Ethereum is a commodity. Leader Gensler said I think otherwise. However, he rejected the widespread industry feeling that the CFTC would be the more appropriate regulator. “Our app record speaks for itself,” he said.
“CFTC and SEC will continue to work together”
He also said that the Digital Commodity Consumer Protection Act, enacted by Senators Debbie Stabenow (D-Mich.) and John Boozman (R-Ark.) of the Senate Agriculture Committee, is the most adequate crypto bill in general. In the middle, the bill does not give the CFTC full authority to classify cryptocurrencies.
Instead, he argued that the CFTC and SEC would continue to work together. He pointed to the two institutions’ record of cooperation in the development and evolution of their security futures. He said the current self-certification process where platforms come to the CFTC to register should be sufficient for crypto participants, including where the question of exchange versus commodity is in doubt.
Rostin Behnam said, “This is the million dollar question. How do we engage with the SEC when a work is in the gray area?” said. She noted that the answer would be two institutions collaborating on legal and political questions to come up with a solution. However, it’s a result that many in the branch find unsatisfactory. Especially given that none of the proposed bill is clear on categorizing cryptoassets.
“We are not doing enough!”
Behnam said there is a need for legislation, both to establish a regulatory framework and to fund the agency. The CFTC recently released its implementation brief for fiscal year 2022, where more than 20% of its 82 transactions are related to altcoin projects. In the midst of these, he said each one was the result of a denunciation or complaint, contrary to the classical surveillance mechanisms. He attributed this to being “handcuffed” by the agency’s lack of tools that it normally has in conventionally regulated markets. In this context, he made the following statement:
Horror and panic lie at the bottom. We are not doing the right thing. If we had more resources, we would be able to expose more fraud and manipulation.