In a significant development for the cryptocurrency industry, Bitcoin ($BTC) and Ethereum ($ETH) have been officially recognised as commodities.
This announcement was made by the Chairman of the US Commodities Futures Trading Commission (CFTC), Rostin Behnam, during the Digital Commodities Senate AG hearing.
According to Behnam, the stance was validated by an Illinois court under the Commodity Exchange Act, aligning with the CFTC’s stance.
It differs from SEC Chairman Gary Gensler’s previous statements, which suggested only Bitcoin was a commodity, and most other tokens should be regulated as securities.
These differing views have led to enforcement actions against several companies, including Binance, Coinbase, Ripple, and Uniswap Labs.
Insights from the Senate hearing
During the hearing, Senator Sherrod Brown questioned what the CFTC has learned from past crypto frauds.
Behnam acknowledged that Bitcoin and other digital assets require different approaches to cybersecurity and resilience compared to traditional assets.
Senator Cory Booker raised concerns about market abuse and emphasised the need for both the SEC and CFTC to address these issues.
Behnam revealed that nearly half of the CFTC’s enforcement cases involve cryptocurrencies, highlighting the challenge posed by a lack of dedicated funding and jurisdiction.
Booker stressed the importance of swift regulatory action to prevent further exploitation and financial losses in the crypto market.
Senator Roger Marshall, on the other hand, discussed the ongoing conflict between the SEC and CFTC over digital asset regulation.
Marshall suggested that the CFTC should handle all digital asset regulation, a proposal supported by Behnam, who cited the CFTC’s expertise.
This change would streamline crypto regulation and support Behnam’s pro-crypto stance.
At the Milken Institute’s Global Conference in May, Behnam had highlighted the need for regulatory frameworks and transparency in the growing crypto industry.
He predicted more enforcement actions as retail interest in digital assets rises without clear guidelines.
Senator Tommy Tuberville also raised concerns about the IRS taxing $BTC miners regardless of profitability, to which Behnam admitted his limited knowledge, prompting Tuberville to call for a quick resolution to avoid deterring crypto market participants.
Implications for the future
The confirmation from the Illinois court that Bitcoin and Ethereum are digital commodities sets a legal precedent with far-reaching implications.
This decision not only provides clarity for investors and businesses but also establishes a standard for how other cryptocurrencies might be classified in the future.
Since the CFTC oversees commodities differently than the SEC does securities, this ruling could lead to new regulatory guidelines for Bitcoin and Ether.
Additionally, this decision could influence how all cryptocurrencies are viewed and regulated in the US.
While the Illinois court’s decision brings clarity to the classification of Bitcoin and Ethereum, it also highlights the ongoing tension between regulators.
SEC Chair Gensler has expressed concerns about proposed legislation like FIT21, arguing it could undermine the SEC’s authority and create regulatory gaps.
Market reactions
Bitcoin remains at a crucial $58,000 price level, with traders like Altcoin Sherpa identifying this as a key area to flip its choppy momentum.
According to another trader, Rekt Capital, Bitcoin recently attempted to break a downtrend by surpassing $59,000 but was rejected and fell back to the low $58,000 level.
Rekt Capital emphasised the importance of Bitcoin closing above $60,600 by the week’s end to avoid further declines.
Meanwhile, Ether’s price experienced an 18% drop to $2,826 between 1 July and 8 July, causing $313 million in leveraged long positions to be liquidated.
Despite this, Ether has partially recovered to $3,100, though it remains below the previous $3,400 support level.
Traders are gradually regaining confidence, supported by strong on-chain and derivatives metrics.
The potential launch of a spot Ethereum exchange-traded fund (ETF) in the US is adding to the excitement.
