CFTC Chair Says Ether Is a Commodity, Hints That SEC Disagrees

Token classification has been an ongoing issue in the space and a point of contention for regulators jockeying for jurisdiction


Source: Shutterstock


key takeaways

  • Congress has stepped in to try and clarify the jurisdictional boundaries between agencies
  • The Responsible Financial Innovation Act, introduced in June, suggests placing most cryptoassets under the CFTC’s regulatory purview

The jostling between the CFTC and the SEC continued in New York on Monday, with CFTC Chair Rostin Behnam saying he sees ether as a commodity — not a security.

“Ether, I’ve suggested that it’s a commodity, ” Behnam said at the Regulating Financial Innovation event Monday morning. 

“Chairman [Gary] Gensler thinks otherwise — or at least hasn’t certainly declared one or the other,” he added.

Token classification has been an ongoing issue, and a point of contention for regulators jockeying for jurisdiction, for years. In 2018, William Hinman, the SEC’s then-director of corporate finance, said publicly that the regulator at the time had no plans to classify both bitcoin and ether as securities. 

This September, however, Gensler appeared to take a step back, suggesting the fixed-income like returns of staking ether is consistent with securities classifications. Ether dipped 11% following Gensler’s remarks. 

The SEC has been known to target tokens for unregistered security offerings through enforcement actions. In June, the agency alleged nine cryptoassets were securities in charges against former Coinbase employees accused of insider trading. 

The US financial watchdog charged Ripple Labs, the issuer behind the XRP token, with an unregistered security offering nearly two years ago — the SEC’s biggest initial foray into the rule-making behind the digital assets economy. 

The ongoing lawsuit is expected to end in the coming months. Both parties have agreed to allow a judge to issue a summary judgment, and industry participants have been eager to parse how the agency’s treatment of ether may play into the outcome. 

Financial institutions are moving ahead with ether products even without explicit clarification. Fidelity Digital Assets is planning to roll out ether trading for institutional clients by the end of the month, the company announced last week.  

A person familiar with the matter told Blockworks that ether meets Fidelity’s criteria for listed assets, at least for now. Fidelity Digital Assets has supported bitcoin trading since its launch in 2018. 

Both the CFTC and SEC maintain that the regulatory bodies are committed to working together to establish rules around digital assets. Congress has stepped in recently to try and clear up the blurred lines.

The Responsible Financial Innovation Act, introduced in June, suggests placing most cryptoassets under the CFTC’s regulatory purview, unless otherwise determined by a court. 

With midterm elections inching closer, it is unlikely any bills continue to advance through Congress, but bill cosponsors Sens. Cynthia Lummis, R-Wyo., and Kirsten Gillibrand, D-N.Y., have said they are confident the measure can pass eventually.

Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.


Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2023

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Research Report Cover Vertex.jpg


The proliferation of new perp DEXs has led to fragmented liquidity across various DEXs and chains. Vertex, known for its vertically-integrated DEX that includes spot, perpetual, and integrated money markets, is now tackling cross-chain liquidity fragmentation through horizontal integration with the launch of new Edge instances. Vertex's integrated offerings and cross-margined account structure amplify the benefits of new instances: native cross-chain spot trading, optimized cross-chain basis trading, consistent interest rates, reduced bridging friction, and more.


Partnering with EtherFi and Angle, the fully on-chain perp DEX features bespoke collateral



Gavin Wood introduced the next evolutionary step for the Polkadot network: the Join-Accumulate Machine, or JAM


The side events were the places to be at Consensus 2024, according to attendees


Also, who’s come out swinging in the spot ether ETF fee war — and who could undercut them


I know it is not in their nature, but US regulators could learn a lot by researching the digital asset frameworks that overseas regulators have already gotten right


Also, the ETF hype train can count out at least one member