The power tussle between the United States Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) over regulatory oversight of the crypto market continues to confuse investors about which rules to follow.
In line with the turf war conflict between the two market watchdogs, CFTC chairman Rostin Behnam has reiterated that Bitcoin (BTC) and Ethereum (ETH) are commodities, not securities.
“I’ve suggested [Ether] is a commodity, and Chair Gensler thinks otherwise,” Behnam said during a Manhattan event featuring Rutgers Law, Wall Street Blockchain Alliance, and Lowenstein Sandler on Monday.
Although SEC Chair Gary Gensler is willing to call Bitcoin a commodity, he does not have the same sentiment towards other assets such as Ether and XRP.
Last month, after the Merge, which saw Ethereum move from Proof-of-Work (PoW) to Proof-of-Stake (PoS), Gensler hinted that the asset could be classified as a security.
While the SEC checked to see if Ethereum would pass the Howey Test, Gensler indicated that staking might officially be considered an investment. If ETH passes the test, it must be registered with the SEC as a security. But Behnam does not agree.
The CFTC Chair also dispelled the common belief that the CFTC would be a more favorable regulator, considering the SEC’s intense crackdown on crypto entities. “Our enforcement record speaks for itself,” he said.
The CFTC chair further explained that, unlike common sentiment, the Digital Commodities Consumer Protection Act bill would not give the agency complete authority to classify cryptocurrencies.
The draft bill was introduced by Senators Debbie Stabenow and John Boozman of the Senate Agriculture Committee.
Based on that, Behnam insisted that the CFTC and SEC would continue to collaborate.
“It’s a pretty cynical view to suggest two agencies can’t figure it out and work together,” he said, referring to their track record of collaboration, like with the development of security futures.
“This is the million-dollar question. How do we engage with the SEC when a product is in the gray area?” he asked.
Behnam then noted that both agencies would have to work together to come up with a solution to legal and policy questions that would create clarity in categorizing crypto assets. He argued that the legislation would help create a regulatory framework and provide resources to the CFTC.