Ether and Stablecoins Could be Commodities: CFTC Chair 

SEC chief Gary Gensler says everything except bitcoin could be a security, even ether, but the head of the CFTC doesn’t agree

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Shutterstock.com/Mark Van Scyoc, modified by Blockworks

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The head of the CFTC has reaffirmed opinions on the securities status of major cryptocurrencies, including ether, that outright clash with SEC chief Gary Gensler’s interpretation of securities law.

At a Senate Agriculture Committee hearing Wednesday, CFTC Chairman Rostin Behnam made the case that both ether and stablecoins such as tether (USDT) could be considered commodities.

Meanwhile, Gensler has claimed every crypto asset, besides bitcoin, is likely a security. He’s even argued that Ethereum’s move to proof-of-stake, which allows holders to earn income passively through staking, could transform it into a security (if it wasn’t already one).

Here’s what Behnam, the top commodities watchdog, had to say this week:

CFTC already greenlit ether futures

Behnam was asked what he thinks of Gensler’s suggestion that all digital assets except bitcoin are securities.

“I’ve made the argument that ether is a commodity,” he said. “It’s been listed on CFTC exchanges for quite some time. And for that reason, it creates a very direct jurisdictional hook for us to police, obviously, the derivatives market but also the underlying market as well.”

Fortune reported Behnam saying at an invite-only Princeton University event in November that bitcoin should be the only cryptocurrency viewed as a commodity. 

However, his latest statements suggest that view could have been softened. 

“We would not have allowed the product – in this case the ether futures product – to be listed on a CFTC exchange if we did not feel strongly that it was a commodity asset because we have litigation risk, we have agency credibility risk if we do something like that without serious legal defense or defenses to support our argument that that asset is a commodity.”

In a December lawsuit against FTX, the CFTC referred to bitcoin, ether and tether as commodities under US law. 

CFTC considers Tether a commodity

The hearing was called to discuss the aftermath of customer losses caused by FTX’s scandal, a result of calls for increased federal oversight of the crypto industry.

Behnam aside, speakers present at the hearing included Sen. Debbie Stabenow and Sen. John Boozman, who are both major backers of the Digital Commodities Consumer Protection Act, which seeks to regulate crypto trading. 

Behnam suggested that stablecoins are commodities in his view, although “colleagues might have a different opinion.

“Notwithstanding a regulatory framework around stablecoins, they’re going to be commodities in my view,” Behnman said.

He added: “Examining the circumstances around the Tether case, it was clear to our enforcement team and the Commission that the Tether stablecoin was a commodity, and we needed to move forward and swiftly to police that market and that company.”

For what it’s worth, Gensler has been indefinite about his take on stablecoins, once saying in late 2021 that they “may well be securities.”

This suggests they should come under the purview of the SEC (Paxos received an SEC Wells notice last month over Binance USD). 

But then again, last October, Gensler said Congress should give the CFTC more power to oversee stablecoins.


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