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

article-image

Source: Shutterstock

share

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.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter.

Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more.

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

Tags

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 18 - 20, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

zerebro.png

Research

Here we tackle the new crypto product ideas we expect agents to enable, reason about the value capture potential of different AI agent platform plays, and survey the current landscape of leading AI agent platform pureplays available to crypto investors today.

article-image

Despite the decades-long lead, there are spooky similarities between ETH and Intel stock

article-image

Some are calling for Solana to pump the brakes until validators are able to share the extra fees with stakers

article-image

Pantera junior partner Mason Nystrom details why projects need to raise capital

article-image

It’ll take time to “disentangle all these strands,” Peirce noted — ongoing litigation included

article-image

The victory lap the crypto industry has run since election night is bumping into some hurdles

article-image

The crypto custody firm’s goal was to “identify price points at which traders might consider the market to be overextended”