Crypto Confusion: CFTC Chair and Former Commissioner Disagree on Classification

Crypto Confusion: CFTC Chair and Former Commissioner Disagree on Classification


Former CFTC commissioner Dan Berkowitz suggests that crypto assets like Ethereum can be both commodities and securities, contradicting SEC Chair Gary Gensler’s assertion that they are all securities.

Speaking on the Unchained podcast on May 23, Dan Berkowitz muddied the regulatory waters even further by stating that cryptocurrency assets can be both commodities and securities.

The notion goes against the opinion of Securities and Exchange Commission Chair Gary Gensler who asserts they are all securities with financing contracts.

Referring to Ethereum (ETH), he stated there is a “special case” where something can be both. “It can be a commodity under the CEA [Commodity Exchange Act] and a security, and that would be like a futures contract on a security, which would be like a futures contract on Apple stock.”

If the regulatory authorities are still unclear on the status of digital assets such as Ethereum (ETH), what hopes do the cryptocurrency corporations and exchanges have with their compliance efforts?

Clear as Mud

CFTC Chair Rostin Behnam likewise faced the burning question in a Bloomberg podcast published on May 23.

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Behnam was requested if the logic that applied to viewing Ethereum (ETH) as a commodity may be applied to other layer-1 blockchain tech assets such as Solana.

He stated there are two listed futures contracts for Bitcoin and Ethereum (ETH), which was a “market-driven effort by exchanges and probably client demand” and had nothing to do with whether they were commodities or securities.

Behnam also mentioned that there is many of legal analysis by exchanges and open dialogue with the CFTC before such products can be listed. This was carried out before approval of the Bitcoin ETF in 2017 and Ethereum (ETH) ETF in 2020, he stated before adding:

“In the context of your question of is it a security or commodity, there is no doubt that we within the agency and at the staff level examine the characteristics of the financial investment to secure that it complies with the law and that is falls within the definition of a commodity, and more significantly, is not a security.”

“If you look up the definition of a commodity under the CEA, nearly everything is a commodity, including securities,” he added.

Regulatory Pressure Continues

In the meantime, the SEC, which assumes very few cryptocurrency assets are commodities, persists to crack down by enforcement on digital investment firms.

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Until these two federal agencies can work together and define digital assets with guidance from Congress, the regulatory uncertainty in the United States will continue, driving talent, innovation, and financing overseas.



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