Behnam said that most fiat-backed stablecoins donโt operate with the intention of profit and thus shall be treated as securities.
The US crypto regulatory landscape has been brewing with uncertainty all the while. On Wednesday, March 8, CFTC Chairman Rostin Behnam told the Senate Agriculture Committee that most stablecoins are commodities. Interestingly, he also puts Ethereum (ETH) in this category and adds that they fall under CFTCโs regulatory overreach.
Talking about Ethereum, the CFTC chair said that โItโs been listed on CFTC exchanges for quite some time, and for that reason,โ adding that it creates a โdirect jurisdictional hookโ for the regulator to look after both ETHโs derivatives market and underlying market.
The recent opinion of the CFTC chair stands in contrast with SEC Chair Gary Genslerโs comments that all cryptocurrencies, except Bitcoin, shall be treated as securities. In the past, the SEC Chair also hinted several times that Ethereum falls under โsecuritiesโ.
However, Wednesdayโs comments from Behnam have kickstarted a new debate in the US crypto regulatory space. He also said that the CFTC has โserious legal defensesโ in order to support its case. โWe would not have allowed the Ether futures product to be listed on a CFTC exchange if we did not feel strongly that it was a commodity asset,โ added Behnam.
CFTC Chair on Stablecoins
CFTC Chairman Rostin Behnam also exerted jurisdictional power over stablecoins stating that most of them are commodities. Speaking to the Senate Agriculture Committee on Wednesday, Behnam said:
โNot withstanding that, they are a commodity, and we have to police that market without a clear direction from Congress that theyโre some other type of asset. Based on the cases that weโve brought around stablecoins, I think that thereโs a strong legal argument that USDC and other similar stablecoins would be commoditiesโ.
Behnam cited an investigation into Tether concerning a 2021 lawsuit. After that, Tether agreed to pay $40 million in settlement charges accepting that they lied about their Tether reserves. โAs far as I know, with fiat-backed stablecoins, thereโs no expectation of profit and return to the stablecoin holder,โ Behnam said.
The CFTC chair also urged the US congress to bring some comprehensive regulatory legislation. He added that thereโs a gap in the current regulation and enforcement alone wonโt solve the problem. โAnd as our markets have proven, as our regulations have proven over many, many decades, comprehensive regulation can prevent fraud, can prevent manipulation, and can stabilize markets and ultimately protect customers,โ he added.
Along with Behnam, several lawmakers have also backed comprehensive crypto regulations in the past. Hopefully, this year in 2023 we see more regulatory clarity from the US Congress.
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
