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Is Ether a Security? The CFTC and SEC Can’t Decide 

Two of America’s top financial regulators may not see eye-to-eye on Ether’s legal status. 

Rostin Benham – Chairman of the Commodities and Futures Trading Commission (CFTC) – reiterated on Monday that he views the asset as a commodity. However, he claims Securities and Exchange Commission (SEC) chairman Gary Gensler may think otherwise.

Ether: Commodity or Security?

The debate surrounding Ether will ultimately determine which agency has regulatory jurisdiction over the asset. Benham’s position aligns with what would give his agency more power, but Gensler’s remains ambiguous. 

“Ether, I’ve suggested that it’s a commodity,” said Benham at an event in New York City hosted by Rutgers University. “I know Chairman Gensler thinks otherwise — or at least hasn’t certainly declared one or the other.”

Benham publicly stated his view in June that both Bitcoin and Ether are commodities, following the draft release of the Lummis-Gillibrand crypto bill. The authors of the bill, who both agree with Benham, claimed at the time that Gensler too viewed Ether in the same light. 

Yet the latter chairman has made no public statements on the legal definition of any specific cryptocurrency besides Bitcoin. He has stated, however, that “most” cryptos are securities, with some exceptions – like Bitcoin – being commodities. 

Clarity From Congress

Benham clarified that both he and Gensler are members of the Financial Stability and Oversights Counsel. However, the council is not focused on issues of regulatory jurisdiction so much as on systemic stability. The former, he said, would need to be resolved by Congress.

Many crypto industry advocates have touted the CFTC as a better-suited and more favorable regulator for the industry. Benham, however, said he gets “very irritated” hearing these claims. “Those who describe us as light touch just don’t know the CFTC,” Chair Behnam said earlier this month. 

According to senator Cynthia Lummis, both her and her colleague’s bill likely won’t be considered by congress until next year. Though she personally believes Ether is a commodity, she agrees with Gensler that most other cryptos are securities. 

Last month, Gensler suggested that proof of stake cryptocurrencies may exhibit aspects that make them more security-like. This has implications for Ethereum, which finished a historic transition to a proof of stake mechanism in September. 

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Benham has pushed for regulatory incentives to also move Bitcoin to proof of stake, but the political will for the move is virtually nonexistent in the Bitcoin community.

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