Rostin Benham – Chairman of the Commodities and Futures Trading Commission (CFTC) – is pleased with the landmark crypto regulation bill unveiled on Tuesday. He said he’s happy with the regulatory guardrails the bill provides and agrees with the designation of Bitcoin and Ethereum as commodities.
In conversation with Washington Post Live on Wednesday, Benham said he was “thrilled” by yesterday’s Responsible Financial Innovation Act. He showed excitement over the steps taken to concretely regulate digital assets, and credited the relevant senators for taking initiative.
“There’s a lot of retail exposure, a lot of speculation, and a lot of volatility,” explained Benham. “I think smart sensible regulation will protect customers, and will bring credibility to the marketplace.”
The Lummis-Gillibrand legislation provides specific criteria for classifying digital assets as commodities, securities, or “ancillary assets”. This was much needed in the crypto space, where rightful federal jurisdiction and regulatory approaches have been hotly debated.
The lack of clarity arguably created roadblocks to institutional adoption of digital assets, for risk of facing legal trouble. Bank of America CEO Brian Moynihan said last month that regulation has left them unable to engage with crypto. In particular, the Securities and Exchange Commission (SEC), has been particularly hostile.
Benham said he disagrees with SEC chairman Gary Gensler’s opinion that most crypto assets are securities. “There are also many commodity coins,” he said, “and we can start with the two biggest coins… Bitcoin and Ether.”
According to Senator Gillibrand, there is now consensus between both chiefs that Bitcoin and Ethereum are commodities, not securities. However, Senator Lummis agrees with Gensler’s analysis that the “lion’s share” of the crypto market is comprised of securities.
Bitcoin’s Environmental Effects
While Benham believes that Bitcoin is a properly decentralized “store of value,” he is not onboard with its current energy consumption levels. In May, the Chief advocated for pushing the protocol to change to proof of stake, saying Bitcoin’s current consumption doesn’t match its economic output.
“We need to remove that dislocation,” he said during today’s interview. “We need consumers to understand and appreciate what’s at stake so that eventually economic incentives can steer their choice away from the more energy consumptive behavior.”
Ethereum completed its Ropsten testnet merge earlier today, bringing it a step closer to its full transition to proof of stake. However, Bitcoiners are staunchly opposed to such a transition, believing proof of stake to be more prone to centralizing forces.
Senators Lummis and Gillibrand disagree that Bitcoin is such a bane to the environment, however. “You can have industry players who are using green energy, and creating markets for green energy, to increase investments in green energy,” said Gillibrand to the Post.