Bitcoin and Ether: CFTC Chair Calls for Urgent Federal Regulation

Bitcoin and Ether Are Commodities, Says CFTC Chief in Senate Testimony

Bitcoin and Ether– The United States commodities regulator chief has reiterated his stance that Bitcoin and Ether — the two largest cryptocurrencies by market cap — are commodities, shedding light on the need for oversight of these digital assets. 

During his address on July 9 to the US Senate Committee on Agriculture, Nutrition, and Forestry, the Commodity Futures Trading Commission (CFTC) Chair Rostin Behnam pointed to a recent court ruling in Illinois which unequivocally classified Bitcoin and Ether as commodities.

This ruling stemmed from a high-profile $120 million Ponzi case involving an Oregon man accused of fraud. The Illinois district court judge explicitly stated in the order that both Bitcoin and Ether qualified as commodities, solidifying the push for regulatory oversight on these digital assets.

Behnam Vouches for Regulatory Reform to Safeguard American Investors

Moreover, Behnam referenced a 2022 report from the Financial Stability Oversight Council, which underscored a regulatory gap in overseeing the spot market for digital assets that are not securities. The report emphasized the necessity for increased oversight by his agency on digital commodities.

Expressing concern over the lack of action by other regulators in the US, Behnam warned that such inaction would not only fail to diminish public interest in digital assets but would also pose heightened risks to financial markets and investors.

He emphasized, In short, our current trajectory is not sustainable. Federal legislation is urgently needed to create a pathway for a regulatory framework that will protect American investors and possibly the financial system from future risk.

Efforts to Regulate Digital Commodities Strengthened by CFTC Chair’s Legislative Priorities

The CFTC chair delineated five key legislative priorities that he proposed his agency could implement to enhance the regulation of digital commodities.

These priorities encompassed the agency’s capacity to customize rules to address the distinct risk profile of cryptocurrencies, a permanent fee-for-service model funding model, mandating registrants to comply with a comprehensive disclosure regime concerning their crypto assets, and strengthening Know Your Customer and Anti-Money Laundering measures for the CFTC. Additionally, he urged the committee to contemplate a disciplined, balanced framework for determining whether tokens qualify as commodities or securities under existing law, and emphasized the necessity for establishing a comprehensive education and outreach program regarding crypto assets in the US. 

Behnam also highlighted the longstanding partnership between the SEC and CFTC, which serves to facilitate robust regulation of securities and derivatives markets.

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