CFTC Regulatory Challenges for Prometheum Launch

Prometheum’s announcement regarding ether’s status raised concerns about SEC approval and its impact on CFTC jurisdiction.

As Prometheum prepares to launch its trading operation, the first and only company to obtain a special purpose broker-dealer license from the US Securities and Exchange Commission, Commodity and Futures Trading Commission (CFTC) Chairman Rostin Behnam stated that agency-specific regulations could become contradictory.

Behnam stated in his Wednesday testimony before the House Committee on Agriculture that Bitcoin and ether are commodities.

According to him, any assertion that Prometheum might put forth to the contrary does not accurately represent the position of the SEC.

“According to what I’ve gathered from reading the press and speaking with members of my staff who have contacted the SEC, this was Prometheum’s independent decision… to communicate to the market their intention to seize ether,” Behnam replied in response to a question regarding the CFTC’s stance on ether.

“According to my understanding, this was an individual decision made by the entity and not the SEC,” Behnam further stated.

Behnam was alluding to the recent declaration by Prometheum that ether would be the inaugural asset of its custody service.

The crypto industry was alarmed by the announcement, with observers wondering whether it could compel the SEC to adopt a more explicit stance regarding the classification of ether as either a security or commodity.

“How this manifests itself is undeniably crucial; the concern is that should the SEC take action, essentially approving [Prometheum’s] determination that ether is a security, it would render non-compliant with Commodity and Futures Trading Commission regulations our registrants or exchanges that list ether as a futures contract,” Behnam continued.

Impact on CFTC Jurisdiction

Agriculture Committee Chairman Glenn Thompson, a known proponent of the cryptocurrency industry, posed the query, to which Behnam replied, “However, the classification of ether as a security might affect the CFTC’s jurisdiction.”

Listed derivatives contracts may be traded on registered commodity derivatives exchanges, as permitted by the Commodity and Futures Trading Commission.