The Chairman of the Commodity Futures Trading Commission (CFTC), Rostin Behnam, has once again reaffirmed the agency’s position that stablecoins should be classified as commodities and placed under its jurisdiction.
At a Senate Agricultural Committee meeting on Wednesday, March 8, the CFTC’s boss re-emphasized this stance while responding to a question raised by New York State Senator Kirsten Gillibrand on the contrasting reports on by the U.S. regulator and its federal counterpart, the Security and Exchange Commission (SEC) the Tether stablecoin.
“Notwithstanding a regulatory framework around stablecoins, they’re going to be commodities in my view.” Benham said, “It was clear to our enforcement team and the commission that Tether, a stablecoin, was a commodity.”
This recent statement by the CFTC chair is in stark opposition to that of the SEC chairman Gary Gensler, who claimed in a New York Magazine interview on February 23 that every other digital asset aside from Bitcoin is a security.
CFTC In Regulatory Battle With SEC Over Stablecoins
In recent times, the Commodity Future Trading Commission and the Securities and Exchange Commission have been wrestling for control of a rapidly growing U.S. crypto market that lacks a comprehensive federal regulatory framework.
Stablecoins, in particular, are one major area of interest, with both U.S. agencies trying to claim regulatory authority over the issuance and trading of these fiat-backed digital assets.
While the CFTC might have been the first federal agency to take enforcement action on stablecoins following its $41 million fine on Tether in 2021, SEC has occupied the news lately as the leading regulator of stablecoin operations in the U.S.
In February, the Securities and Exchange Commission issued a Wells Notice to stablecoin operator Paxos, stating ongoing considerations to sue the tokenization firm on the basis of its Binance USD stablecoin being an unregistered security.
Within the same period, the SEC also filed a lawsuit against Terraform Labs and its CEO, Do Kwon, for orchestrating a multi-billion security fraud involving the algorithmic stablecoin TerraUSD Classic (USTC).
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There Is Need For An Agreement
The current tussle between both the SEC and CFTC over stablecoins does not bode well for the U.S. crypto market as it leaves other key federal banking authorities uncertain of how to deal with these digital assets.
Thus, there is a need for a consensus between both agencies, either by dialogue or the implementation of a comprehensive legal framework.
That said, stablecoins remain vital components of the crypto market, as they allow investors to avoid the high volatility associated with most crypto assets.
At the time of writing, the total stablecoin market is valued at $135.5 billion, representing about 13.5% of the total cryptocurrency market.