In a regulatory victory for the largest cryptocurrencies, Bitcoin (BTC) and Ethereum (ETH) were officially classified as commodities during the Senate Attorney General’s hearing on digital commodities on Wednesday.
Supreme Court upholds commodity status of Bitcoin and Ether
According to live From Fox reporter Eleanor Terret’s hearing, Rostin Behnam, Chairman of the U.S. Commodities Futures Trading Commission (CFTC), it was confirmed that an Illinois court has upheld the status of BTC and ETH as digital commodities under the Commodity Exchange Act.
The move is consistent with the CFTC’s position, which is notably at odds with previous statements by Securities and Exchange Commission (SEC) Chairman Gary Gensler.
Gensler had previously declared that only Bitcoin falls under the securities classification, leaving the majority of other tokens subject to securities regulation based on the Howey test, which has led to increased enforcement actions over the past year with legal proceedings against key industry players such as Binance, Coinbase, Ripple and Uniswap Labs.
CFTC Chairman Acknowledges Regulatory Challenges
During the hearing, Fox reporter Eleanor Terret reported that Sen. Sherrod Brown questioned what lessons the CFTC had learned from past crypto frauds.
Behnam responded by acknowledging the uniqueness of the technology behind Bitcoin and digital assetswhich requires a different approach to cybersecurity and operational resilience compared to traditional asset classes.
On the other hand, Senator Cory Booker expressed concern about the prevalence of market abuse and the responsibility of the SEC and CFTC to address it. He noted that nearly half of case The statistics the CFTC looked at were related to cryptocurrency, describing it as an “extraordinary” statistic.
Behnam acknowledged Booker’s point, noting the challenges facing an agency that oversees trillion-dollar markets while regulating a market that Behnam said is outside its jurisdiction and lacks dedicated funding.
Calling for action, Senator Booker highlighted the potential for increased exploitation and financial losses in the cryptocurrency market if regulatory measures are not implemented quickly.
Simplified monitoring of digital assets
Terret also noted that Senator Roger Marshall had addressed the jurisdictional dispute between the SEC and CFTC in recent months, determining the classification of digital assets.
Marshall suggested that all liability be placed under the CFTC’s jurisdiction, to which Behnam agreed, citing expertise and capacity; if this happens, it would be a win for industry regulation as a whole, as Behnam has already stated his pro-crypto thoughts.
Like before reportedAt the Milken Institute’s 27th Annual Global Conference in May, Behnam highlighted the urgent need for regulatory frameworks and transparency in the growing crypto industry.
Additionally, the CFTC chairman predicted an increase in enforcement actions over the next two years due to increased interest from retail investors and appreciation of digital assets without clear direction.
The outcome of Taxation The issue of cryptocurrency was also discussed during the hearing. Senator Tommy Tuberville expressed concerns about the fairness of the IRS (Internal Revenue Service) taxing BTC miners regardless of their profitability.
Behnam admitted his limited knowledge on the matter, prompting Tuberville to assert the need for a quick resolution to prevent harassment of people entering the crypto market.
Worryingly, Behnam pointed out that while the SEC and CFTC coordinate their enforcement actions, the two agencies lack regulatory coordination.
At the time of writing, Bitcoin was trading at $57,870, down more than 4% over the past week, following a sharp decline of more than 20% over the past month from a June high above $70,000.
Featured image of DALL-E, chart from TradingView.com
