Yesterday, Monday, October 24, the Rutgers Center for Corporate Law and Governance, the Wall Street Blockchain Alliance, and Lowenstein Sandler LLP hosted a symposium on “Regulating Financial Innovation: The Future of Crypto and Blockchain.” One of the most widely noted comments concerned the classification of Ethereum (ETH) in the United States.
The keynote speaker at the event was none other than Rostin Behnam. The Chairman of the Commodity Futures Trading Commission (CFTC) discussed the agency’s current and future role in regulating the fintech and cryptoasset industries.
The most burning issue discussed was the jurisdictional tussle between his agency and the Securities and Exchange Commission (SEC). Behnam tried to dispel the narrative of a turf war between the two agencies.
It’s a pretty cynical view to say that two agencies can’t manage to find a solution and work together.
At the same time, he expressed that the CFTC views Ethereum (ETH) as a commodity – not a security. “Ether, I’ve suggested that it’s a commodity,” he said and added:
Chairman [Gary] Gensler thinks otherwise — or at least hasn’t certainly declared one or the other.
The classification of altcoins has been a pressing issue for the crypto industry for many years due to a lack of regulatory clarity, which has been a massive impediment to adoption progress in the US.
In 2018, William Hinman, then the SEC’s director of corporate finance, gave a widely acclaimed speech in which he certified Bitcoin and Ethereum as being classified as non-securities.
However, Gensler, who has been chairman of the SEC since April 2021, suggested in September that Ethereum’s shift to proof of stake with its fixed-income returns could warrant a securities classification. Following Gensler’s comments, the ETH price tanked by 11%.
Will The CFTC Be More Favorable For Altcoins and Ethereum-Based Tokens?
Behnam also clarified that the common industry belief that the CFTC is the more favorable regulator is a misconception: “Our enforcement record speaks for itself”, and pointed to his agency’s track record.
As Bitcoinist reported, about a month ago, the CFTC brought its first action against an autonomous decentralized organization (DAO) protocol, bZeroX, and its founders. The CFTC fined the platform $250,000 and ordered it to be ceased and desist from the industry.
At the same time, Behnam complained that the agency has been handcuffed due to a lack of tools compared to traditional markets. Thus, every crypto-related case at the CFTC has been resolved solely because of a whistleblower or a tip.
The underlying fear and concern is we’re not doing enough. If we had more resources, we could bring more fraud and manipulation to light.
Behnam believes part of the blame for the lack of regulatory clarity lies with Congress. Because of the upcoming midterm elections, crypto legislation has stalled.
The CFTC chairman also stressed that the Digital Commodities Consumer Protection Act, introduced by Senators Stabenow and Boozman that is widely believed to be the crypto bill with the best chance of passing – would not give the CFTC full authority to categorize cryptocurrencies.
Instead, he argued that the CFTC and SEC should continue to work together – an approach the crypto industry has suffered from in recent years.
At the time of writing, Ethereum (ETH) was still in its narrow range between $1200 and $1373 where the price is lingering for almost one month now. The RSI is in neutral territory at 52.