CFTC chair Rostin Behnam expressed concern that competing regulations may arise if SEC-registered broker Prometheum were to compel the commission to determine whether Ether constitutes a securities.
According to the chairman of the commodities regulator, there would be a clear clash between US financial market regulations and the possible classification of Ethereum as a security if the Securities and Exchange Commission were to let one of its registered entities hold the cryptocurrency.
“The head of the Commodity Futures Trading Commission,” Rostin Behnam, told the House Committee on Agriculture on March 6 that both Bitcoin and Ethereum are commodities.
Behnam brought up Prometheum’s move last month to license itself as an SPBD by the SEC in order to provide ETH custody services.
“As far as I can tell, based on what I’ve read in the news and conversations with my staff—who have contacted the SEC—Prometheum made this choice on its own,” Behnam said in response to a query on his thoughts on the company’s intentions.
“As far as I can tell, the entity [Prometheum] made this choice on its own, and the SEC had nothing to do with it.”
According to Behnam, the decision does not reflect the SEC’s perspective on Ether. He further said that the SEC’s reaction to Prometheum’s decision “clearly is extremely crucial.”
“Concerned that our registrants, our exchanges who list Ether as a futures contract sort of in non-compliance of the SEC’s regulations as opposed to CFTC rules in the event that the SEC takes action to validate Prometheum’s decision—that is, to classify Ether as a security,” Behnam explained that this could lead to problems.
SPBDs registered with the SEC are only allowed to own securities; however, SEC Chair Gary Gensler has not said whether Ethereum is a commodity or a security, plain and simple.
Along with the “conclusion that Ether is a commodity” being a “years-old choice” that has led to well-functioning markets, he emphasized the significance of preserving market integrity.
The CFTC will “periodically brush up against the boundaries” of current regulations as a result of market development and technology, according to Behnam’s prior prepared statements.
As an example, he said that more people are investing in cryptocurrency, which has “stretched the limitations of the present legal system.”
Behnam stated, “The public’s enthusiasm for digital assets has not been dampened by the absence of legislation addressing the regulatory vacuum over the digital commodity asset spot market.”
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