Concerns have been raised by CFTC Chairman Robert Behnam regarding Prometheum’s request to the SEC for the custody of Ethereum as security.
Contrary to the Securities and Exchange Commission (SEC), the chief of the commodities regulator has disputed Prometheum’s Ethereum (ETH) assertions.
Permitting one of its registered firms to hold Ethereum in custody, he cautioned, could violate U.S. financial market regulations. Rostin Behnam, chairperson of the Commodity Futures Trading Commission (CFTC), classifies Bitcoin and Ethereum as commodities.
CFTC And SEC Clash Over Prometheum’s Ethereum Custody
On Wednesday, March 6, CFTC Chairman Behnam testified before the House Committee on Agriculture. Furthermore, he commented on the recent determination made by Prometheum, an SEC-licensed special purpose broker-dealer (SPBD), to provide ETH custody services. In opposition to the entity’s assertions, he proclaimed, “Both Bitcoin and Ether are commodities.”
Although the CFTC and SEC hold divergent views on Ethereum, Behnam stated that he does not believe Prometheum’s decision is consistent with the SEC’s stance.
He underscored the significance of the SEC’s reaction to Prometheum’s decision. The CFTC Chairman stated in his most recent testimony, “The issue is if we do have any action by the SEC to essentially validate [Prometheum’s] decision, i.e. constituting Ether as a security, it will then put our registrants, our exchanges who list Ether as a futures contract sort of in non-compliance of SEC rules as opposed to CFTC rules.”
In reference to the regulatory ambiguity surrounding Ether, Behnam noted that SPBDs registered with the SEC are only authorized to custody securities. Gary Gensler, chairman of the SEC, has not specified whether Ethereum qualifies as a commodity or a security.
Behnam Demands Intervention From Congress
Furthermore, Behnam emphasized the criticality of maintaining “market integrity.” Furthermore, he emphasized that Ethereum’s market functionality has been effectively supported by its classification as a commodity over the years; therefore, Prometheum’s request should not be granted.
In his prepared remarks, Behnam emphasized the difficulties presented by technological advancements and market evolution, prioritizing the necessity for legislative intervention from Congress.
Furthermore, he noted that the expanded involvement in the cryptocurrency market has tested the boundaries of the current regulatory structure, specifically about filling the regulatory void concerning spot markets for digital commodity assets. Behnam reaffirmed that congressional intervention is required to resolve these regulatory challenges effectively.
