FameEX Hot Topics | CFTC Chair Advocates for Federal Law to Classify Bitcoin and Ether as Commodities

During his Senate testimony, Rostin Behnam, the chairman of the Commodity Futures Trading Commission (CFTC), strongly advocated for the necessity of federal legislation to effectively regulate digital commodities like Bitcoin and Ether. He highlighted the market's significant volatility and the recurring issues of fraud as major concerns that underscored the need for stronger regulatory frameworks to protect investors and maintain financial stability.

Addressing the U.S. Senate Committee on Agriculture, Nutrition, and Forestry, Behnam pointed to the substantial evolution of the digital asset market, which has been marred by numerous scandals and fraudulent schemes. He emphasized that comprehensive federal legislation was imperative to govern this rapidly growing market securely.

In his testimony, Behnam reaffirmed that bitcoin and ether are officially recognized as commodities, supporting his point with a recent judicial ruling. “Just last week, the District Court in the Northern District of Illinois supported the CFTC’s stance in a fraud case involving an unregistered entity that promised steady returns on digital asset commodities like bitcoin and ether," Behnam noted. The court's decision further solidified the status of these digital assets as commodities under the Commodity Exchange Act.

Behnam also reflected on the CFTC’s proactive enforcement actions over the years, stating, “It has been almost nine years since the CFTC initiated its first enforcement action related to an illegal bitcoin operation. Since then, we've aggressively utilized our robust, albeit limited, anti-fraud and anti-manipulation authorities.” He disclosed that the CFTC has handled over 135 cases involving digital commodities, resulting in substantial penalties and restitution, emphasizing the collaboration with both federal and state law enforcement agencies.

Highlighting the dramatic increase in enforcement activities since 2020, Behnam linked this to the accelerated and sustained interest in digital assets among U.S. investors. Despite these efforts, he pointed out the current limitations in the CFTC’s powers, particularly in the spot market for non-security tokens, and called for new legislative measures to address these gaps.

Further, Behnam stressed the need for international cooperation to establish regulatory certainty, which is crucial to prevent misuse by malicious entities while also fostering innovation and deriving economic benefits from digital assets. This comprehensive approach, he argued, is essential for managing the complexities of the global digital asset market.

Disclaimer: The information provided in this section is for informational purposes only, doesn't represent any investment advice or FameEX's official view.