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In a congressional hearing, Commodity Futures Trading Commission (CFTC) Chairman Rostin Behnam shed light on the regulatory scrutiny surrounding Ethereum (ETH) as the cryptocurrency garners increasing attention from regulators and market participants alike.

FOX Business journalist Eleanor Terrett shared the news on X with the CFTC chairman who was testifying before members of Congress.

Behnam, testifying before the House Agriculture Committee's GOP members, revealed that the CFTC is actively collaborating with Chairman Gary Gensler and the SEC on the classification of Ethereum as either a security or nonsecurity. 

The focus on Ethereum's regulatory status comes amid plans by Prometheum Inc. to offer custody services for Ethereum on its platform.

Implications of SEC's decision on Ethereum

The chairman emphasized the significance of the SEC's decision regarding Prometheum's assertion that Ethereum should be classified as a security. Behnam cautioned that if the SEC validates Prometheum's claims and deems Ethereum a security, CFTC registrants that facilitate the listing of Ethereum could potentially find themselves in violation of compliance standards.

Behnam emphasized the working relationship “with Gary Gensler and the agency to ensure that whatever steps are taken are deliberate and they understand what  the consequences would be if there was a decision by the agency to determine that Ether was a security.” Behnam went on to emphasize the importance of safeguarding the integrity of the markets at present.

Some members of the crypto community have scrutinized and signed petitions against Gary Gensler in the past, questioning the consistency of his regulatory approach despite his persistent advocacy for increased investor protection in the cryptocurrency market.

The February transfer of 4,300 ETH (worth around $10.7 million) to the Kraken exchange by Jeffrey Wilcke, one of Ethereum's cofounders, has also triggered diverse responses from across the cryptocurrency community.

The recent testimony by Rostin Behnam highlights the complex regulatory laws surrounding cryptocurrencies like Ethereum. Meanwhile, analysts have acknowledged Ethereum’s performance lately and is on the verge of achieving new milestones as significant upgrades and shifts in investment take place.