In recent months, a fascinating battle has unfolded within US regulators. The center of the battle? Ethereum (ETH). It is still unclear whether ether is a commodity (raw material) or a security (effect) is.
According to Dan Berkovitzformer commissioner at the Commodities Futures Trading Commission (CFTC), ETH can legally fall under either category. He says that during the Unchained podcast with Laura Shin.
👀 Former CFTC Commissioner Dan Berkovitz explains how ETH can be both a commodity and a security.
📜 “The law is clear,” he states on Unchained.
🎧Listen: https://t.co/lZgSejziX0
— Laura Shin (@laurashin) May 23, 2023
Conflicting messages from regulators
Over the past few months, the two major regulators in the US, the CFTC and the SEC, have had quite a bit contradictory statements helped the world. At the same time, both authorities have still not provided a definitive answer to the key question: Is ethereum a security or a commodity?
In an April hearing, SEC Chairman Gary Gensler said anything but bitcoin (BTC) should be considered a security, and he refused to go further into the topic. The CFTC has also gone quite a bit in terms of position in recent months. In any case, there is no clarity yet.
Adding fuel to the fire, Berkovitz explains that due to the overlapping legal definitions of commodities and securities in US law, Ethereum may even be classified as both.
“The law is clear. Something can actually be both a commodity and an effect.”
Ethereum: commodity and security?
Berkovitz emphasized that commodities are not just physical commodities like wheat or gold, and that anything that falls under the jurisdiction of a futures contract can be defined as a commodity.
Berkovitz also said that a security, which normally belongs to the SEC, can also be the subject of a futures contract, bringing it back under the jurisdiction of the CFTC. Thus, if an asset is a commodity in the eyes of the CFTC and also a security in the SEC’s definition, it is possible that both regulators have control over it.
This increasing confusion shows once again the urgent need for clear regulation in the crypto world. The uncertainty surrounding the status of cryptocurrencies such as bitcoin and ethereum could have major implications for businesses and investors. For example, many investors are currently still on the sidelines due to a lack of regulatory clarity.