Bitcoin and Ether are officially classified as digital commodities by the CFTC. This was confirmed by an Illinois court, according to the CFTC Chairman Behnam.
He also said that 70-80% of assets in the crypto market are non-securities. This contradicts SEC Chair Gary Gensler’s claim that most cryptocurrencies are securities.
During a Senate hearing, Senator Sherrod Brown asked Behnam about lessons learned from past crypto frauds.
Behnam pointed out that the technology behind crypto is unique, requiring the agency to address new questions about cybersecurity and operational resilience.
He stated that nearly half of the cases on the CFTC enforcement docket involve crypto, calling this a staggering statistic. Behnam mentioned that regulating a market without proper jurisdiction and funding puts both markets at risk.
Senator Cory Booker criticized the lack of congressional action, leaving the SEC and CFTC to manage the crypto market. He urged for swift action to protect investors from abuse.
Booker pointed out the urgent need for regulation to prevent more people from losing money. He addressed leaders, urging them to act quickly to avoid further exploitation in the crypto market.
Senator Roger Marshall brought up the ongoing turf war between the SEC and CFTC crypto regulation. He questioned Behnam on whether it would be simpler to place the entire crypto market under CFTC jurisdiction.
Behnam replied, saying he would be happy to take on that role, citing the CFTC’s expertise and capacity. However, he added that definitional changes might be needed to distinguish between securities and commodities.
The hearing also saw comments from Senator Peter Welch, who reminded everyone to behave properly during the proceedings. Senator Tommy Tuberville raised concerns about the IRS taxing Bitcoin miners regardless of profit.
Behnam admitted he hadn’t looked deeply into this issue but agreed that it needed to be addressed to encourage crypto involvement without undue harassment.
Behnam stated that the SEC and CFTC coordinate on enforcement but not on regulatory matters. He believes there is a need to prioritize regulating centralized exchanges over DeFi.
Behnam reiterated the importance of focusing on centralized exchanges, as they are the primary points of interaction for most crypto investors. He stressed that proper regulation of these exchanges is necessary for market stability and investor protection.
Senator Roger Marshall questioned Behnam about the possibility of simplifying the regulatory framework by placing the entire crypto market under CFTC’s jurisdiction. Behnam expressed willingness to take on this responsibility.
However, he acknowledged that definitional changes might be needed to clarify what constitutes a security and a commodity. Senator Tommy Tuberville brought up the issue of taxation for Bitcoin miners.
He questioned the fairness of the IRS taxing miners regardless of their profit. Behnam admitted he hadn’t explored this issue in depth but agreed that it was a major concern.
Tuberville argued that addressing this problem quickly is essential to encourage crypto participation and prevent harassment of miners.
Reporting by Jai Hamid
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