Regulation

CFTC Chair Claims 70-80% of Crypto Are Non-Securities

Published

6 months ago

July 10, 2024

Rostin Behnam, the Chairman of the CFTC has recently appeared before the Senate Agriculture Committee to discuss the classification of digital assets in the cryptocurrency market. Behnam mentioned that the U.S. Illinois court had recognized Bitcoin (BTC) and Ethereum (ETH) as commodities under the Commodity Exchange Act.

Furthermore, he pointed out that 70-80% of tokens in the crypto market are not securities, which is the opposite of what SEC Chairman Gary Gensler has stated about most cryptocurrencies being securities.

BTC and ETH Classified as Commodities

Behnam in his testimony noted that the Illinois court had ruled that Bitcoin and Ethereum are commodities that are regulated by the CFTC. This classification is in line with the CFTC’s viewpoint and makes a clear distinction between these top digital assets and other tokens that might be classified as securities.

According to Fox reporter Eleanor Terrett, Behnam, chairman of the Commodity Futures Trading Commission (CFTC), said that the Illinois court confirmed that BTC and ETH are classified as digital commodities. He also pointed out that 70-80% of assets in the crypto market are…
— Wu Blockchain (@WuBlockchain) July 10, 2024

This court affirmation enhances the CFTC’s jurisdiction over BTC and ETH since the two are considered commodities and there is a clear guideline on how they will be regulated.

According to Behnam, “The Illinois court has established that Bitcoin and Ethereum are commodities,” stressing on the legal recognition of this status. This confirmation is crucial for legal certainty, particularly in light of the ongoing discussion about the legal classification of various digital assets in the market.

70-80% of Crypto Are Non-Securities

Addressing the broader digital asset market, Behnam asserted that 70-80% of tokens are non-securities. This statement challenges SEC Chairman Gary Gensler’s previous assertion that most cryptocurrencies are securities. Behnam’s position underscores a significant regulatory divergence between the two agencies responsible for overseeing the financial markets.

While giving his testimony, Behnam pointed out that new legal mandates are required for the CFTC to enforce its control over non-security tokens and to offer adequate protection to the investors.

He pointed out that there are regulatory gaps for these assets that make up the majority of the market capitalization. Behnam said,

“Given the risks that this unregulated market poses to U. S. investors, I have consistently and publicly called for new legislative authority for the CFTC. “

CFTC Chair Calls for Federal Legislation

According to the CFTC chair, during his time in the digital asset market, he has seen it transform and go through phases of high volatility and many scandals. He also raised concerns over inadequate legislation to safeguard investors against fraud and other risks in the market. Concurrently, he also made an appeal to Congress to quickly pass laws that will enable the CFTC to effectively govern the digital asset market.

Subsequently, he stressed that if such laws are not put in place, the public interest in the digital assets will persist and therefore, pose threats to financial markets and investors. ”The course we are on right now cannot be sustained,” Behnam said, calling on Congress to act at the earliest opportunity to protect the American investors and the overall financial system.

In addition, the CFTC’s chair testimony also discussed some of the issues that the CFTC has encountered in regulating the digital asset market. Consequently, he pointed out that the firm is ready to collaborate with other agencies and all stakeholders to formulate a comprehensive plan on how to regulate the market and protect investors.