The argument over the legal categorization of cryptocurrencies keeps getting more heated. Promoting his agency to monitor Bitcoin and Ether, two of the biggest cryptocurrencies by market capitalization, Rostin Behnam, Chair of the Commodity Futures Trading Commission (CFTC), spoke before the US Senate Committee on Agriculture, Nutrition, and Forestry on July 9.
BTC, ETH Classified by CFTC Chair as Commodities
Behnam cited a recent decision from an Illinois district court during his testimony, which treats Bitcoin and Ether as commodities in the framework of a $120 million Ponzi scheme involving an Oregon man accused of fraud. Delivered on July 3, this decision also determined commodities as Olympus (OHM) and KlimaDAO (KLIMA). Behnam pointed out in its ruling that under the Commodity Exchange Act, Bitcoin and Ether are commodities.
The chair of the CFTC underlined the need of closing regulatory holes exposed in a Financial Stability Oversight Council (FSOC) 2022 report. The paper argued for the CFTC to take a more major role in supervising digital commodities that are not classed as securities since the absence of control for these assets. Behnam cautioned that delay of other US authorities would not reduce public interest in digital assets but rather raise the risk to financial markets and investors.
“Short said, our present course is not sustainable. Federal laws are desperately needed to provide a road map for a regulatory framework that would shield American investors and maybe the financial system from upcoming risk,” Behnam said. He said the CFTC is positioned to enforce crypto regulations and listed five main legislative priorities to better control digital commodities.
Suggestions of the Chair of CFTC
First of all, Behnam proposed that the CFTC might modify regulations to fit the special risk profiles of cryptocurrencies. Second, he suggested funding agency operations with a permanent “fee-for-service model”.
Thirdly, he advised mandating that registrants follow a thorough disclosure policy with relation to their crypto assets. He also underlined the need of improving under CFTC control Know Your Customer (KYC) and Anti-Money Laundering (AML) policies.
Furthermore, Behnam advised the committee to take into account a disciplined, fair approach for deciding whether current legislation classify tokens as commodities or securities. Furthermore underlined by him the need of a thorough education and outreach campaign to let the public know about US crypto assets.
Cooperation Between Regulators
Behnam underlined the long-standing cooperation between the SEC and the CFTC, which has enabled strong control of securities and derivatives markets.
“Strong, solid regulation of securities and derivatives markets is facilitated by a long-standing cooperation between the SEC and CFTC,” Behnam stated. “I am sure that the two agencies will keep closely working to guarantee a fair, reliable, and efficient system for listing and trading digital assets on controlled exchanges.”
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