CFTC Chair on crypto regulation: there’s a ’70-year old case-law’

on Sep 28, 2022
  • CFTC Chair Rostin Behnam says crypto regulation is hinged on 70-year old case law.
  • Determining what's a commodity and what's a security key to providing market certainty.
  • He says the CFTC and SEC are not fighting one another over regulatory purview for crypto.

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Even as the need for regulatory clarity in crypto becomes ever more overdue, there seems to be a hurdle that’s making developments around this topic seem like a ‘tuff war’.

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Here we are talking about the US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). Clarity should be, for instance, where regulators have pointed out what’s a commodity and what’s a security in crypto? And which government agency has the mandate to regulate this or that?

But why is this taking this long? One side of the story.

CFTC Chair Rostin Behnam shares his view

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In CFTC Chairman Rostin Behnam’s view, what’s causing this thing that looks like a supremacy battle is a “70-year-old case law” that regulators are relying on in order to say this or that should be a security or a commodity.

SEC Chair Gensler has previously said that only Bitcoin is a commodity, implying the rest could be securities. On this, Behnam told CNBC’s ‘Squawk Box’ in an interview:

“Well, we’re going to have to figure that out legislatively, because this is a new asset class and there are different components and characteristics of this asset class as opposed to traditional asset classes.”

He added:

“We have to rely on 70-year-old case law to determine what’s a security or a commodity. We have one case in New York that says Bitcoin is a commodity. There are other cases out there – we are just trying to figure out.” 

Read more: SEC Chair Gensler: New crypto regulation could impact broader markets.

CFTC wants to enter cash markets

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The CFTC Chair was nonetheless quick to highlight that both the SEC and CFTC are not squabbling over crypto regulation. According to him, the two regulators collaborate across the swaps and futures space. However, what the CFTC wants from Congress is the greenlight to oversee cash markets.

“For us, the CFTC, the difficulty is, you know, we are a derivatives regulator. We don’t oversee cash markets. So the authority that I’ve been asking Congress for is cash authority – so that we can go into the Bitcoin cash market, the Ether cash market, and the other digital tokens.” 

Behnam also noted that despite what looks like differences, the SEC and CFTC are all working towards finding a “reasonable outcome.” Primarily, the goal is to ensure there’s certainty for the crypto market as well as offer necessary protections to retail investors.


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