Hearing Summary: CFTC Chairman Counters SEC's Position, Insists Ether and Stablecoins are Commodities

The Chairman of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, previously claimed that everything other than Bitcoin is considered a security, while the Chairman of the Commodity Futures Trading Commission (CFTC), Rostin Behnam, emphasized during a hearing on March 9 that Ether and stablecoins are commodities. This raises doubts about the alignment of regulatory policies even between the two major regulatory agencies. How should cryptocurrency industry players comply with regulations in such circumstances?

Competition in Fines?

Senate Agriculture Committee Chair Debbie Stabenow mentioned criticisms that the CFTC has recently faced at the start of a hearing, such as being too small in scale and lacking resources to take on too many responsibilities in the commodity markets.

She disagreed with such claims, emphasizing:

Over the past 15 years since being reauthorized by Congress, the CFTC has received $3.5 billion in appropriations and collected nearly $20 billion in fines, which she referred to as a "pretty good return on investment for the American people," demonstrating the CFTC's commitment to rigorous enforcement. She hopes there can be consensus to provide the CFTC with more robust funding.

Slow Progress in Collaboration with the SEC

CFTC Chairman Rostin Behnam was asked about the slow progress between the CFTC and SEC in defining cryptocurrencies as securities or commodities, and whether there have been discussions on defining asset attributes between the two.

Rostin Behnam stated that the CFTC, including himself and the entire staff, continues to engage in meaningful collaboration with the SEC but noted that this is a complex issue and seemed to imply that the SEC's preferred reference to securities laws may be outdated:

While we can define digital assets as securities or commodities based on previous precedents, digital assets have many unique features compared to traditional assets from many perspectives. I believe regulatory agencies must have new thinking, a responsibility to collaborate with relevant departments, and establish a framework acceptable to all parties.

SEC's View on Everything Except Bitcoin Being Securities, What is Your Opinion?

Rostin Behnam emphasized that Ether has been classified as a commodity on exchanges regulated by the CFTC for a long time, with the CFTC and exchanges having a deep understanding of Ethereum's attributes.

If we did not strongly believe that Ether falls under the commodity category, we would not allow Ether futures contracts to be listed on exchanges regulated by the CFTC, as this would bring us litigation risks and regulatory credibility crises.

Very Certain that Stablecoins are Commodities

Rostin Behnam was asked by a senator about the CFTC's $41 million fine on stablecoin issuer Tether in 2021 and the classification of stablecoins as commodities, which contrasts with SEC Chairman Gary Gensler's position.

He stated that he believes stablecoins are financial instruments that should be regulated, and although some may hold different opinions, the CFTC and its enforcement team had previously conducted legal analysis on Tether, thoroughly investigated the Tether case, and it is very clear that Tether stablecoin is indeed a commodity.