The chairman of the Commodity Futures Trading Commission (CFTC) insists and expresses certainty that Ethereum (ETH) is a commodity and not a security, as the chairman of the Securities and Exchange Commission (SEC) claims.
CFTC chief, Rostin Behnan, stressed that the derivatives regulator would not allow Ethereum-based futures products to be listed on CFTC-regulated exchanges if it did not feel strongly that Ethereum is a commodity asset.
Rostin Behnam’s comments referred to the assertion by Securities and Exchange Commission (SEC) Chairman Gary Gensler that all cryptocurrencies – except Bitcoin – are securities, speaking at a hearing before the Senate Committee on Agriculture, Nutrition and Forestry.
Question for Behnan
During the hearing mentioned above, Senator Kirsten Gillibrand (D-NY) asked Behnan:
“In light of Chairman Gensler’s recent report that all digital assets other than Bitcoin are securities, what does this mean for certain defined contract markets [DCMs] that currently offer futures or are exchanged for Ethereum?” We note that DCMs are exchanges that operate under the regulatory oversight of the CFTC.
“Obviously it will raise questions about the legality of these DCMs listing these digital assets that are supposed to be securities,” the CFTC chairman responded, reiterating with certainty: “I have made the argument that Ethereum is a commodity.”
Noting that Ethereum-based products have been listed on CFTC exchanges for some time, Behran said:
“For this reason, it creates a very direct jurisdictional hook for us to control the derivatives market and the underlying market.”
He elaborated:
“The process for which an exchange or a DCM will register a contract is very clear under our legislation. They could seek approval from the Commission [CFTC] or they could self-certify a product. It is this self-certification process that shifts the responsibility to both the CFTC and the market participant.”
The CFTC chief explained why he firmly believes that Ethereum is a commodity:
“I would say that there is serious and deep legal analysis done before a product self-certifies, so I have no doubt in my mind and having known that and having been on the Commission when the Ethereum futures were recorded, that both the Exchange and the Commission thought very deeply and thoughtfully about ‘what is the commodity’.
We would not have allowed the Ethereum futures product to be listed on a CFTC exchange if we did not strongly believe it was a commodity asset. Because we have a risk of litigation, we have a credibility risk to the company if we do so without serious legal defenses or defenses to support our argument that the asset is a commodity,” Behnam concluded.
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