- 70%-80% of BTC and ETH commodities are not securities, CFTC clarifies
- CFTC chairman citing Illinois court says CTFC has regulatory and supervisory authority over digital assets.
In recent months, the cryptocurrency markets have faced many legal battles. For example, the Ripple case got everyone speculating about XRP’s status and whether it involves security.
The legal battle between crypto companies and the Securities Exchange Commission (SEC) has become a significant challenge for investors in cryptocurrency markets.
However, in a surprising move, CFTC Chairman Rostin Behnam has stated that Bitcoin [BTC]Ethereum [ETH]and about 70%-80% of cryptocurrencies are not securities.
CFTC digital commodities
Behnam appeared before the Senate Agriculture Committee to discuss the classification of digital assets in the crypto market. In his statement he stated that,
“If you measure the Bitcoin economy by market cap, 70-80% of its assets are non-securities, meaning there is no direct federal oversight.”
The Illinois lawsuit
Amid the legal battle over the security status of most crypto commodities, the CFTC chairman has revealed that an Illinois court has ruled BTC and Ether as commodities classified under the Commodity Exchange Act.
He further argued that CTFC regulates digital commodities such as BTC. This classification brings a different perspective on BTC, ETH, and other digital assets considered securities.
Behnam revealed the details of the court’s decision, stating that:
Last week, an Illinois district court granted summary judgment in favor of CTFC in a case involving fraud by an unregistered entity that promised stable returns in digital assets such as Bitcoin and Ether. In its ruling, the court reaffirmed that BTC and ETH are commodities under the CEA (Commodities Exchange Act).
CFTC vs. SEC
In particular, the CFTC’s position on digital assets, such as Bitcoin, contradicts the SEC’s long-standing argument.
According to SEC Chairman Gary Gensler, many cryptocurrency securities are based on the Howey test. Gensley argues that if an individual or entity sells tokens and generates money while the buyer expects a profit, this fits into something that can be considered a security.
So, based on the SEC’s argument, most cryptocurrencies can be classified as security.
However, Behnam believes that CTFC has the authority to regulate and oversee such digital commodities. That’s why he asked Congress to take swift action on crypto regulation, warning that inaction puts investors at risk and puts the US at a competitive disadvantage.
Implications for the crypto market
The clarification by the CTFC chairman has attracted attention and excitement among key crypto players. For exampleHEX explorer, the portfolio manager for Hex and PulseChain, happily shared on X stating that:
“This is an important milestone for our ecosystem. The court’s confirmation that Ethereum, of which PulseChain is a fork, is NOT a security is a great success.”
Read Ethereum’s [ETH] Price forecast 2024-2025
The classification of BTC and ETH commodities as non-securities has several implications. Such consequences include less regulatory burden because commodities are less regulated than securities, allowing for greater flexibility in market activities.
Finally, digital assets as commodities enable greater market development through innovation and liquidity.