Clash of Regulators: CFTC Sues Binance, Defends Ethereum as Commodity, Igniting Tension with SEC

A day after the U.S. Commodities and Futures Trading Commission (CFTC) filed a lawsuit against Binance, Chairman Rostin Behnam confirmed his view that Ethereum is a commodity.

The CFTC chairman had previously said that Ethereum (ETH) is a commodity, and since it has been listed on CFTC exchanges for some time, it falls under their jurisdiction. This position puts the CFTC at odds with the U.S. SEC, whose Chairman, Gary Gensler, recently stated that all Proof-of-Stake (PoS) cryptocurrencies should be subject to U.S. securities laws.

In the lawsuit against Binance, the CFTC specifically mentions that several cryptocurrencies, including Bitcoin, Ether, Litecoin, and some stablecoins, are commodities that Binance was trading illegally.

During a budget hearing, the CFTC chairman confirmed his belief that Ether is a commodity, and since it's listed on CFTC exchanges, they have a regulatory relationship with both the derivatives market and the underlying market.

Behnam also suggested that other crypto trading platforms might face scrutiny in the future. In recent years, some in the crypto industry considered the CFTC a more favorable agency for the sector. However, the CFTC and Behnam have recently taken several enforcement actions against crypto companies, including the recent lawsuit against Binance, the largest crypto platform by trading volume.

Lawmakers asked Behnam if he still believes there is room for crypto innovation in the U.S. He expressed concern, noting that Europe has implemented a comprehensive regulatory regime and that the U.S. needs to "move the ball forward."

It will be interesting to see what further regulatory measures the CFTC introduces for the crypto industry in the future.