Rostin Behnam, Chairman of the U.S. Commodity Futures Trading Commission (CFTC), testified before the House Agriculture Committee and answered questions about the agency's role and jurisdiction over the cryptocurrency markets.
Behnam's statement came the day the Securities and Exchange Commission (SEC) sued Coinbase, the largest US crypto exchange.
The SEC also sued Binance, the world's largest crypto exchange, and its founder, Changpeng Zhao, yesterday, accusing them of operating an illegal cryptocurrency exchange using billions of dollars from Binance client funds.
"Ethereum Is Not a Security"
Behnam echoed his previous words in 2018, reiterating his stance that Ethereum, the second largest cryptocurrency by market capitalization, is a commodity and not a security. He said that he has argued in the past that ETH is a commodity and believes that decentralization is one of the key features that make up a commodity or security.
“I have argued in the past that Ether is a commodity,” Behnam said.
"What the bill does well is to focus on decentralization as the key feature of what constitutes a commodity or security… This should be the basis of how we define it and how we start the conversation."
Behnam was referring to a bill proposed by Republican lawmakers last week that would clarify the roles and responsibilities of the SEC and CFTC over cryptoassets. The bill defines digital assets as securities or commodities, depending on their level of decentralization and whether they are issued by an organization or purchased on a registered CFTC exchange.
Rostin Behnam also defended the CFTC's jurisdiction over digital assets, saying the agency had filed 82 lawsuits over eight years without obtaining regulatory authority from Congress. He said he estimated that a regulatory regime similar to the one in the bill would cost around $120 million over three years, and that the rulemaking process would take between six and 24 months.
“I would say we are probably ahead of other regulators in the world in terms of our intersection with digital asset markets,” Behnam said.
The head of the CFTC added that he does not consider the entire crypto industry to be unregulated, as there are government regulatory requirements and some anti-money laundering and know-your-customer rules. However, he said this situation did not keep him up at night and he expects more clarity and guidance from Congress.
Behnam also declined to comment on the timing and motivation of the SEC's lawsuits against Binance and Coinbase, saying he doesn't know if they were a coincidence.
Behnam on the power struggle between the CFTC and the SEC:
“This isn't a win-win situation. What I mean is that if this committee and Congress give the CFTC more power over the cash commodity market, we don't get that power from the SEC or any other agency, that power doesn't exist anyway. There's a loophole. No one regulates the cash commodity markets.
I encourage you and your colleagues to work closely with the SEC to ensure that the bill does not undermine securities laws.”
*Not investment advice.
