For years it has been very unclear under which legislation in the US crypto falls and which criteria apply. This prompted the U.S. Securities and Exchange Commission (SEC) to sue Ripple (XRP) two years ago. The SEC believes that XRP is a securityor security, and you need a license for this.
Ethereum (ETH) seemed to be exempt from this because the US Commodity Futures Trading Commission (CFTC) it rather as commodity, or raw material. However, the market began to doubt whether this is still the case, but the CFTC has now labeled ether as such again.
According to the CFTC, as per their filing today, ETH is a commodity. This really should put any security designation to rest. pic.twitter.com/PkHWredNK4
— Hal Press (@NorthRockLP) December 13, 2022
Which regulator is right?
The SEC and CFTC are both eager to regulate the crypto market. Both regulators have therefore sued FTX and Alameda founder Sam Bankman-Fried this week.
But the discussion of whether certain cryptocurrencies are a type of digital commodities or securities is far from over. In fact, early this month, CFTC Director Rostin Behnam stated that bitcoin (BTC) is the any raw material in the crypto market.
That is quite a statement, because last summer the same institute argued that many tokens are no securities at all. In addition to bitcoin, ether and XRP would also fall under this. So the CFTC appears to be quite volatile.
SEC Director Gary Gensler even suggested burying the hatchet. Not much later, the CFTC argued that competition is driving European MiCA legislation to overtake the US. So in the big picture, the US is losing.
Ethereum is a commodity after all
Now it gets even more complicated. The statement that bitcoin is the only ‘digital commodity’ no longer seems to apply. In the case against FTX, Alameda and SBF, the CFTC has casually stated that “certain digital assets, including bitcoin (BTC), ether (ETH), and tether (USDT)” are commodities.
That state in the indictmenthas Hal Press, founder of crypto hedge fund North Rock Digital discovers. It is striking that in addition to bitcoin and ether, the USDT stablecoin from Tether is also mentioned.