CFTC’s Behnam says Prometheum’s ETH stance could create inter-agency conflict

As Prometheum, the first and only company to secure a special purpose broker dealer license from the US Securities and Exchange Commission, gears up to launch its trading operation, Commodity and Futures Trading Commission Chairman Rostin Behnam said rules across agencies could become conflicting.

Bitcoin and ether are commodities, Behnam told the House Committee on Agriculture during testimony Wednesday. He believes that any claim that Prometheum may be making to the contrary is not reflective of the SEC’s stance.

“From my understanding, essentially reading the press and talking to my staff, who have reached out to the SEC, this was an independent decision by Prometheum…to signal to the market that it is their intent to custody either,” Behnam said when asked about how the CFTC views ether.

“So it is my understanding that this was not at all a decision by the SEC, this was an individual decision by the entity,” Behnam added.

Behnam was referring to Prometheum’s recent announcement that it would launch its custody service with ether as its first asset. The announcement raised eyebrows across the crypto industry as onlookers speculated whether the news might force the SEC to take a more direct position on ether’s status as a security or commodity.

“How this plays obviously is very critical…the issue is if we do have any action by the SEC, essentially validating [Prometheum’s] decision constituting ether as a security it will then put our registrants or exchanges who list either as a futures contract sort of in non-compliance of SEC rules as opposed to CFTC rules,” Behnam added.

Behnam’s comments were in response to a question from Agriculture Committee Chairman Glenn Thompson — a known supporter of the crypto industry — about how ether being classified as a security could impact the CFTC’s jurisdiction. The CFTC allows registered commodity derivatives exchanges to list either derivatives contracts.

Get the news in your inbox. Explore Blockworks newsletters:

The Breakdown: Decoding crypto and the markets. Daily.
Empire: Crypto news and analysis to start your day.
Forward Guidance: The intersection of crypto, macro and policy.
0xResearch: Alpha directly in your inbox.
Lightspeed: All things Solana.
The Drop: Apps, games, memes and more.
Supply Shock: Bitcoin, bitcoin, bitcoin.