CFTC vs SEC: Bitcoin, Ethereum, and 80% of crypto not securities?

• 70%-80% of BTC and ETH commodities are non Securities CFTC clarifies
• CFTC chairman citing Illinois court argues CTFC have regulatory and oversight authority over digital assets.

Over the last months, cryptocurrency markets have faced many legal battles. For instance, the Ripple case left everyone speculating over XRP status and whether it’s security.

The legal battles between crypto companies and the Securities Exchange Commission (SEC) have become a significant challenge affecting 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 assets are non-securities, meaning there is no direct federal oversight”.

The Illinois Court Case

Amidst the legal battle over the security status of most crypto commodities, the CFTC chairman has revealed that an Illinois court 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, positing that,

” Last week, a district court in Illinois entered summary judgment in favor of CTFC in a case involving fraud by an unregistered entity that promised steady returns in digital assets such as Bitcoin and Ether. In its decision, the court reaffirmed BTC and ETH are commodities under CEA (Commodities Exchange Act).”

CFTC vs SEC 

Notably, the CFTC’s viewpoint of digital assets, such as Bitcoin, contradicts the long-standing argument of the SEC.

According to SEC chairman Gary Gensler, many cryptocurrencies are securities based on the Howey test. Gensley argues that if an individual or entity is selling tokens and generating money while the buyer anticipates profits, that fits into something that can be considered a security.

Thus, based on the SEC’s argument, most cryptocurrencies can be classified as security.

However, Behnam believes CTFC has the authority to regulate and oversee such digital commodities. Thus, he asked Congress to act swiftly on crypto regulation, warning that inaction puts investors at risk and leaves the U.S. at a competitive disadvantage.

Implications for the crypto Market

The clarification by the CTFC chair has gained attention and received excitement from key crypto players. For instance, HEXscout, the portfolio manager for Hex and PulseChain, happily shared on X stating that,

“This is a significant milestone for our ecosystem. The court’s confirmation that Ethereum, which PulseChain is a fork of, is NOT a security is a major success.”

Read Ethereum’s [ETH] Price Prediction 2024-2025

The classification of BTC and ETH commodities as non-securities has various implications. Such impacts include less regulatory burden since commodities have less regulation than securities, allowing more flexibility in market activities.

Finally, digital assets as commodities allow for more market development through innovation and liquidity.