Cryptocurrencies like Ethereum have their fair share of controversy regarding categorization. Government regulatory bodies like the Securities and Exchange Commission (SEC) and the U.S. Commodities Futures Trading Commission (CTFC) have had past battles with other digital assets.
The SEC is currently embroiled in a long-running case with Ripple Labs, with the focus on defining the XRP token as a security.
The CFTC also views all virtual currencies as commodities under the Commodity Exchange Act (CEA). However, this stance by the regulatory body is controversial since cryptocurrencies pride themselves on being decentralized.
However, in light of recently outrageous events in the crypto space, the CTFC and SEC are more determined than ever to increase regulation and proper checks.
Investors also desire more crypto coordination, transparency, and honesty to prevent future catastrophes.
CTFC Vs. Ethereum
The CTFC has labeled Ethereum as a commodity again during a recent court filing. This stance contradicts the position maintained by chief Rostin Behnam in his statement on November 30. According to Behnam, Bitcoin is the only cryptocurrency that should be classified as a commodity.
The CTFC, in its lawsuit against Sam Bankman-Fried, FTX, and Alameda research, referred to Bitcoin, Tether (USDT), and Ether as commodities under the provisions of the United States law. The body quoted the law from Section 1a (9) of the Act, 7 U.S.C. § 1a (9).
The CTFC has been internally divided on its viewpoint to group Ether as a commodity in the past weeks. Benham said that Bitcoin is the sole crypto asset that should be called a commodity. This view is in contrast to the filing.
SEC To Be Granted More Power?
Meanwhile, popular crypto skeptic Sen. Elizabeth Warren is said to be preparing a bill to grant the SEC more regulatory authority over crypto assets.
Jeffrey Sprecher, Intercontinental Exchange CEO, believes that crypto assets will eventually be called securities. During a financial services conference on December 6, Sprecher stated that this move would ensure greater consumer protections.
However, SEC Chairman Gary Gensler is currently undecided on the subject. In an interview with Jim Cramer during the Mad Money show on June 27, Gensler confirmed that Bitcoin was a commodity. “That’s the only one I’m, going to say,” he stated.
He had suggested that Ether was security after its initial coin offering (ICO). But it had become more decentralized and evolved into a commodity. In September, he also seemed to reconsider his stance during Ether’s transition to Proof-of-Stake (POS). Gensler stated that staked tokens might be considered securities under the Howey Test.
Crypto assets grouping is vital in the U.S. as the CFTC regulates commodities, while the SEC regulates securities.