FameEX Hot Topics | CFTC Chair Urges Federal Legislation to Treat Bitcoin and Ether as Commodities

During his Senate testimony, Rostin Behnam, chairman of the Commodity Futures Trading Commission (CFTC), made a compelling case for the urgent need for federal legislation to regulate digital commodities such as Bitcoin and Ether. He cited the significant market volatility and frequent incidents of fraud as critical concerns that highlight the necessity for robust regulatory frameworks to protect investors and ensure financial stability.

Behnam addressed the U.S. Senate Committee on Agriculture, Nutrition, and Forestry, detailing the substantial growth and the numerous scandals that have plagued the digital asset market. He underscored the essential need for comprehensive federal legislation to securely regulate this rapidly expanding sector.

In his testimony, Behnam confirmed that bitcoin and ether are officially recognized as commodities, reinforcing this status with a recent court ruling. “Just last week, the District Court in the Northern District of Illinois affirmed the CFTC’s position in a fraud case against an unregistered entity that promised consistent returns on digital asset commodities like bitcoin and ether," Behnam reported. This decision further cements their classification as commodities under the Commodity Exchange Act.

Reflecting on the CFTC’s enforcement track record, Behnam noted, “It has been almost nine years since the CFTC launched its first enforcement action against an illegal bitcoin operation. Since that time, we have vigorously applied our powerful, though limited, anti-fraud and anti-manipulation authorities.” He revealed that the agency has pursued over 135 cases involving digital commodities, which have resulted in substantial penalties and restitution, with significant cooperation from both federal and state law enforcement partners.

Behnam also highlighted the significant increase in enforcement actions since 2020, correlating it with the rapid and sustained interest in digital assets among U.S. investors. Despite these efforts, he acknowledged the limitations of the CFTC’s current authority, especially in the spot market for non-security tokens, and called for new legislation to bridge these regulatory gaps.

Moreover, Behnam emphasized the importance of international cooperation in establishing regulatory certainty to prevent exploitation by bad actors, while simultaneously promoting innovation and deriving economic benefits from digital assets. He argued that this global approach is vital to effectively manage the complexities of the international digital asset market, ensuring a balanced regulatory environment that supports both protection and progress.

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