Behnam said that most fiat-backed stablecoins don’t 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 CFTC’s regulatory overreach.
Talking about Ethereum, the CFTC chair said that “It’s been listed on CFTC exchanges for quite some time, and for that reason,” adding that it creates a “direct jurisdictional hook” for the regulator to look after both ETH’s derivatives market and underlying market.
The recent opinion of the CFTC chair stands in contrast with SEC Chair Gary Gensler’s 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 ‘securities’.
However, Wednesday’s comments from Behnam have kickstarted a new debate in the US crypto regulatory space. He also said that the CFTC has “serious legal defenses” in order to support its case. “We 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,” 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:
“Not withstanding that, they are a commodity, and we have to police that market without a clear direction from Congress that they’re some other type of asset. Based on the cases that we’ve brought around stablecoins, I think that there’s a strong legal argument that USDC and other similar stablecoins would be commodities”.
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. “As far as I know, with fiat-backed stablecoins, there’s no expectation of profit and return to the stablecoin holder,” Behnam said.
The CFTC chair also urged the US congress to bring some comprehensive regulatory legislation. He added that there’s a gap in the current regulation and enforcement alone won’t solve the problem. “And 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,” 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.