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Stablecoins are commodities, not securities, the Commodity Futures Trading Commission (CFTC) has decided, ending a long-running debate on the subject, at least from their perspective.
On Wednesday, CFTC Chair Rostin Behnam spoke at the Senate Agriculture committee hearing, stating that Ether and stablecoins should be treated as commodities.
The view opposes that of Securities and Exchange Commission (SEC) Chair Gary Gensler, who has been considering whether the assets are securities. He argued that Ether's move to proof-of-stake shifts it to being a security.
Read more: Staking, Securities & Enforcement
Behnam instead believes that Ether is a commodity and should be overseen by the CFTC; a view held by the body in its complaint against FTX founder Sam Bankman-Fried in December.
“Notwithstanding a regulatory framework around stablecoins, they’re going to be commodities in my view,” Behnam said. “It was clear to our enforcement team and the commission that Tether, a stablecoin, was a commodity.”
Enforcement staff at the SEC previously issued to BUSD issuer Paxos a Wells notice, which the financial watchdog uses to inform companies and individuals of possible enforcement action.
Its notice alleges that BUSD is an unregistered security as the SEC declared that crypto staking services violate security laws.
Behnam said he is working with the SEC for coordination also stated that the CFTC has not received legal guidance from the agency about how it differentiates between commodities and securities.
Binance vs SEC
Binance has been under the SEC's microscope as of recent. Towards the end of last month, Paxos announced it was ending its relationship with Binance, following scrutiny from US authorities (although Paxos claimed the move was unrelated).
Binance's CEO Changpeng Zhao has taken a stance against the SEC's position on stablecoins, agreeing with crypto analyst Miles Deutscher's stance of "how on earth is a STABLECOIN considered a security, when it clearly doesn’t meet the Howey Test criteria?"
5/ On the alleged SEC vs Paxos lawsuit, I have no information about it, other than public news articles. The lawsuit is between the US SEC & Paxos.— CZ 🔶 Binance (@cz_binance) February 13, 2023
I am not an expert on US laws. But personally, I agree with Mile’s logic here (not that it means much): https://t.co/b8H3bjLAoy
The SEC was also hot on Binance's heels over its $1 billion deal to acquire Voyager Digital's assets.
Last month, the SEC said in a filing that the US$1 billion deal could violate laws and might be discriminatory. The SEC was particularly concerned about how Binance plans to repay Voyager’s former customers.
However, US Bankruptcy Court Judge Michael Wiles said he was "absolutely shocked" at the SEC for interfering without explaining giving guidance.
On Wednesday, Wiles overturned the SEC's objections and approved the deal.
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