The Commodity Futures Trading Commission (“CFTC”) and the U.S. Securities and Exchange Commission (“SEC”)’s battle over crypto regulatory supremacy continues. During a Senate Agriculture Committee hearing on March 8, 2022, CFTC Chair Rostin Benham declared that certain digital assets, such as Ethereum and stablecoins, are commodities, providing a jurisdictional hook for the CFTC to regulate the derivatives markets trading these digital assets as well as any underlying market for these products. In responding to questions from Senator Kirsten Gillibrand (D-NY), Benham indicated his position was not new, stating “I’ve made the argument that Ethereum is a commodity . . .it’s been listed on CFTC exchanges for quite some time.”
Benham’s position appears to be in direct conflict with the SEC. SEC Chair Gary Gensler has asserted that virtually all crypto assets are securities and thus fall within the purview of the SEC. In recent public statements, Gensler stated that he would be happy for the CFTC to regulate Bitcoin and “other non-security tokens” so long as the SEC had the pick of the rest. Earlier this week, in an opinion piece published in The Hill, Gensler claimed that the SEC has “been clear that most crypto tokens that are backed by entrepreneurs, among other features, are likely to be securities.” Although Gensler has expressed support for Congress providing the CFTC with more authority to regulate the crypto market, that’s only “as long as it doesn’t take away power from the SEC.” While it is clear that both agencies agree that the digital assets market needs greater regulatory oversight to minimize risk to the financial system and the wider economy, many questions remain regarding what agency will lead that regulatory oversight, and what the specific rules will be.