Reported by: Scott Nover

Bitcoin, the largest cryptocurrency by market capitalization, is widely considered a commodity. A federal court ruling in 2018 gave the CFTC regulatory authority by designating bitcoin as such. 

But CFTC chairman Rostin Behnam and SEC chairman Gary Gensler agree that’s the exception rather than the rule. Despite grey areas including the cryptocurrency ether, most cryptocurrencies function as securities (registered or not). “There are probably many, many more security tokens than commodity tokens, but I believe there are a large number of commodity tokens,” Behnam said during a legal event hosted by Rutgers Law School and the law firm Lowenstein Sandler on Oct. 24. (Highlighting the ambiguity, the SEC’s Gensler disagrees with Behnam on proof-of-stake cryptocurrencies such as ether which he argues likely pass the regulatory test for determining securities.) 

The challenge is that the two agencies, he said, are dealing with truly new financial products that don’t easily fit into established legal categories. Digital assets, Behnam says, are “unlike any traditional commodities in that they are speculative in nature and they are being traded by retail market participants,” something the CFTC rarely deals with.

In Congress, multiple bills are being considered that would broaden the CFTC’s authority, something the crypto industry supports. But even if the CFTC becomes crypto’s primary regulator, Behnam has signaled he’s ready to bring the crypto industry into compliance, suggesting more legal battles to come.

At the moment, Behnam said, he feels his agency’s effectiveness is limited. Despite stepping up enforcement, all of the recent enforcement actions against crypto-related entities have come from insider tips. “If we had more funds, if we had more personnel, we could bring more of this fraud and manipulation to light,” Behnam said.

Read full report: https://qz.com/us-commodities-chief-thinks-most-cryptocurrencies-are-s-1849697645/amp