CFTC disagrees with SEC, says stablecoins and Ethereum are not securities

As the head of the US Commodity Futures Trading Commission (CFTC), Rostin Behnam has classified most stablecoins as commodities, stating that new laws cannot change this classification. Speaking at a hearing before the US Senate Agriculture Committee, Behnam said:

“They are a range of commodities, and we have to control that market, even without clear guidance from Congress. Based on the examples we have provided regarding stablecoins, I consider USDC and similar stablecoins to be commodities.” To support his point, Behnam cited the CFTC’s previous enforcement action against Tether, the issuer of the USDT stablecoin, and Bitfinex exchange in 2021. At that time, the agency concluded that Tether had “made false statements and concealed the truth” behind the USDT collateral mechanism, and that Bitfinex had engaged in illegal off-exchange trading activities.

The CFTC’s statement appears to conflict with the responsibilities of the US Securities and Exchange Commission (SEC). Last month, the SEC sued Paxos, claiming that the Binance BUSD stablecoin was an unregistered security. Following the allegations, Paxos immediately suspended the issuance of this stablecoin.

Behnam and SEC Chairman Gary Gensler are known for frequently expressing differing views on Ethereum, the second-largest cryptocurrency by market capitalization. Although consistently affirming that Bitcoin is not a security, Gensler has been uncertain about ETH.

In 2018, former SEC Chairman Jay Clayton confirmed that Ethereum and similar decentralized cryptocurrencies were not securities, even if they were initially sold through illegal securities offerings.

Since Ethereum’s move to The Merge, Gary Gensler believes that all Ethereum transactions fall under the jurisdiction of the US and sees staking ETH as a securities investment.

In his latest statement in early March, the SEC Chairman affirmed that “only Bitcoin is not a security.” On this point, Behnam recently told the press:

“We have adjusted the trading aspects related to Ethereum. It is not a coincidence that futures are listed on the CFTC market. We conducted an analysis before concluding that Ethereum is a commodity, and I have been consistent with that for some time now.”

In a lawsuit filed by FTX in December 2022, the CFTC clarified its stance, stating that it would not classify cryptocurrencies such as Bitcoin and Ethereum as commodities, but would classify stablecoins as such. The issue of regulating the cryptocurrency market remains a contentious one, with regulatory agencies taking different positions on the classification of digital assets.

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