Sign In with Google
Sign In with Facebook
Ether's Dual Identity: Insights from a Former CFTC Commissioner
According to the former Commissioner of the Commodities Futures Trading Commission (CFTC), Dan Berkovitz, Ether could potentially carry a dual identity - being both a commodity and a security. This unique classification suggests that it may be regulated by two federal bodies.
Conflicting Views on Ethereum's Ether Token
The former Commissioner of the United States CFTC expressed his thoughts during a recent episode of Laura Shin’s Unchained podcast. He stated that under the law, Ether could potentially be within the legal jurisdiction of both regulatory bodies.
Intersecting Statements by CFTC and SEC
The ongoing debate regarding Ether's legal classification primarily arises from discordant views between the CFTC and the Securities and Exchange Commission (SEC). Over the last half-year, the CFTC has continuously classified Ether and other cryptocurrencies as commodities.
Contrastingly, under the guidance of Gary Gensler, the SEC has not categorically classified Ether. In April, during an oversight hearing, Gensler proposed that all entities, barring Bitcoin, should be considered securities, but refrained from further comment.
A Potential Overlap in Legal Definitions
Despite the apparent contradiction of an entity being both a commodity and a security, Berkovitz suggests that due to overlapping legal descriptions, it could be feasible. He quoted, "The law is clear. Something can actually be both a commodity and a security."
Understanding the Underlying Legal Complexities
Explaining the inherent confusion, Berkovitz clarified that commodities are not merely tangible items such as wheat or oats. Anything falling under a futures contract can technically be deemed a commodity, which further elucidates why "futures" forms part of the CFTC's name.
In comparison, securities, as outlined by the Securities Act and the Exchange Act, include elements like notes and investment contracts. If these are subjects of a futures contract, they too could fall under the CFTC's jurisdiction.
The CFTC primarily oversees the regulation of futures and swaps on commodities, while the SEC strictly controls securities. However, if an entity is viewed as a commodity by the CFTC and simultaneously a security under the SEC's definition, it becomes plausible for both regulatory bodies to oversee it.
Challenging the SEC's Perspective
During the same podcast episode, Collin Lloyd, a partner at the multinational law firm Sullivan & Cromwell, challenged the SEC's assertion that everything, apart from Bitcoin, should be given a "security" status under federal securities law.
The Real Question to Consider
Lloyd suggested redefining the question to ask whether a digital asset is being sold as part of a securities transaction, which he feels is a more appropriate inquiry that is reliant on facts and circumstances.
