Chairman, Commodity Futures Trading Commission (CFTC) Rostin Behnham He said that the only cryptocurrency that should be classified as a commodity is Bitcoin.
Behnam made the comments at a private cryptocurrency event at Princeton University.
In the context of the collapse of FTX, Venham took the opportunity to discuss appropriate legislation to combat the pitfalls of unregulated crypto markets.In the maze of what constitutes appropriate legislation At issue is whether a token is a security or a commodity.
Behnam hinted that Ethereum is not a commodity, even though he previously thought it was a commodity. In May, the CFTC chairman said in his interview with CNBC that he believes both Bitcoin and Ethereum deserve to be considered commodities. Behnam also said there are “many” other tokens that fit the commodity category.
He asked the authorities to analyze all cryptocurrency tokens and classify each as either a commodity or a security. He then assigns power of attorney to the Securities and Exchange Commission (SEC) for tokens designated as securities and to the CFTC for tokens designated as commodities.
Under U.S. law, the determination of whether something is a security howie test, which dates back to 1946. It consists of three main questions.
- Is it an investment of money with the expectation of future profits?
- Is it an investment of money in a common enterprise?
- Are there any benefits from the efforts of promoters or third parties?
Securities generate profits from a common enterprise that, when applied to 21st century cryptocurrencies, can be viewed as a centralized entity. Furthermore, the basis for arbitration is obtaining an agreement that the investment made will benefit the investor.
The Howey test faces multiple criticisms, including the failure of the 76-year-old ruling to adequately capture modern investments.
Nevertheless, the determining factor why many call Bitcoin a commodity boils down to the lack of centralized authority behind the token. , thus eliminating the argument that promoters or third parties have an advantage over the market.
CFTC is not soft touch
Recently, the CFTC has pushed for increased scrutiny of the early cryptocurrency industry to please the digital asset industry.
General industry sentiment is that the CFTC is a lighter touch and more open Balancing innovation and regulationwill be the preferred regulator over the SEC.
However, former CFTC enforcement attorneys Gary Dewar I dismissed the idea that the CFTC would be an easy ride. He said violations of the rules would result in “severe” enforcement actions regardless of whether the SEC or CFTC are the overseeing regulators.
“Any violation will be addressed with enforcement action by any regulator and will be severe.”
In a speech at Princeton University, Benham made it clear that he is not in favor of cryptocurrencies, saying digital assets have no use other than speculation.