On crypto classification, ex-CFTC Commissioner Dan Berkowitz speaks on cryptocurrency community Asset Status.
Gary Gensler, chairman of the Securities and Exchange Commission, believes all are securities with investment contracts. Using Ethereum as an example, he stated there is a “special case” where something can be both.
“It can be a commodity under the CEA [Commodity Exchange Act] and a security, and that would be like a futures contract on a security, which would be like futures on Apple stock.”
What hope do crypto companies and exchanges have for their compliance efforts if regulators are still uncertain about the status of digital and crypto assets such as Ethereum?
Examining the Controversy Surrounding Crypto Assets
Rostin Behnam, chairman of the Commodity Futures Trading Commission (CFTC), addressed the issue in a Bloomberg podcast published on May 23. When asked if the reasoning behind perceiving Ethereum as a commodity could be applied to layer-1 blockchain assets like Solana.
According to him, there are two futures contracts listed for BTC and ETH, which was a “market-driven effort by exchanges and probably client demand” and had nothing to do with whether or not they were commodities or securities.
Before such products can be listed on exchanges, according to Behnam, there is extensive legal analysis and frank communication with the CFTC. This was accomplished prior to the 2017 and 2020 certification of the BTC ETF and ETH ETF, he said, adding:
“In the context of your question regarding whether the financial asset is a security or a commodity, there is no doubt that the agency and its staff examine the financial asset’s characteristics to ensure that it complies with the law, meets the definition of a commodity, and, most importantly, is not a security.”
“If you look up the definition of a commodity under the CEA, nearly everything is considered a commodity, including securities,” he added.
Bloomberg Crypto (@crypto) May 21, 2023
Navigating the Challenges with Digital Crypto Assets
Regulatory pressure continues for crypto companies amid uncertainty over crypto assets. In the meantime, the SEC, which assumes that very few crypto assets are commodities, maintains its enforcement efforts against digital asset firm. although another pertinent question is ‘are-digital-assets-securities-or-commodities?
Until these two federal agencies can collaborate and define digital assets with guidance from Congress, they will continue to operate independently.
