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CFTC Chairman Speaks Up About the Regulation of Crypto Assets

Following the crypto market’s sell-off last week, people have grown concerned over their protection and financial stability. So Rostin Behnam, the chairman of the Commodity Futures Trading Commission (CFTC), sat down for an interview with Becky Quick, co-anchor of CNBC’s “Squawk Box,” to talk about the regulation of the market.

Rostin Behnam was sworn in as the agency’s 15th chairman on January 4, 2022, after being unanimously confirmed by the U.S. Senate. Before his appointment and nomination by U.S. President Joe Biden, Behnam served as the CFTC Commissioner, which he took in 2017. Last year, he was elected as the Acting Chairman by the agency members.

During the interview, Behnam discussed the regulation of crypto assets and the roles of the U.S. Securities and Exchange Commission (SEC) and the CFTC.

“This is a little bit of an old age issue between the CFTC and the SEC. We have a great relationship historically. We continue to communicate and work together. We have a lot of common registrants, but within this space, in my view, it makes sense for commodities to be regulated by the Commodity Futures Trading Commission, and securities to be regulated by the SEC, and within the sphere of digital assets and the coins, which make up thousands and thousands, there are naturally going to be some commodities and some securities.”

“And in my view, it makes sense to sort of parse through the two and figure out where we can place each, and it’s going to be difficult because from a legislative standpoint, again, given what I said earlier, given the novelty of some of these coins and the technology, we’re going to have to figure out what will constitute a security under the traditional securities law and what would constitute more of a commodity so that we can regulate appropriately given the two different legal structures.“

Regarding the concerns about which crypto assets are considered commodities and fall under the jurisdiction of the CFTC and which are securities, which fall into the jurisdiction of the SEC, Benham said:

“Well, I could say for sure Bitcoin, which is the largest of the coins and has always been the largest regardless of the total market cap… is a commodity. So Ether as well — I’ve argued this before, my predecessors have as well — is a commodity.”

“So there may be, in fact, hundreds, if not thousands of security coins, but there are plenty of commodity coins. And I think it makes sense as we’ve done historically to make sure that each agency has jurisdiction over commodities and securities, respectively.“