On October 10th, CFTC Chairman Heath Tarbert made it clear that he saw Ethereum as a commodity. This is big news because the United States Commodity Futures Trading Commission is essentially saying Ethereum is not a security and the complex legal issues that would come from it being a security do not apply.
In his words:
“We’ve been very clear on bitcoin: bitcoin is a commodity. We haven’t said anything about ether—until now. It is my view as chairman of the CFTC that ether is a commodity.”
He went on to explain the heuristic he was using that “similar assets would be treated the same.” If a cryptocurrency is considered a commodity and it forks, unless there is a notable change in its adherence to the Howey test, that cryptocurrency would also be considered a commodity.
CFTC Clarity Affects Regulations
As the second-biggest cryptocurrency by market capitalization, this helps Ethereum and the overall community quite a bit. First of all, commodities are not securities and fall under much different (and less stringent) regulations. The community has thus far been self-policing, but if this distinction were made, it would help provide clarity, and therefore more confidence in the space. Second, it opens up the possibility of Ether futures being traded on U.S. markets. This would be a strong legitimizing move for the cryptocurrency that would cascade onto the rest of the community.
The CFTC is moving faster than the SEC when it comes to making decisions and providing clarity. Since December 2018, they have been researching Ethereum and looking for public comments regarding how the blockchain works and differs from that of Bitcoin. Additionally, they hired a former Coinbase executive to be the new director of market oversight. All of this seems like exactly what the crypto community wishes the SEC would do.
According to Tarbert, the CFTC has had talks with the SEC regarding these cryptocurrencies and they are in agreement, but the SECs other investigations in the space have caused a lot of doubt.
Further, Tarbert mentioned that the CFTC was assessing the planned Libra stablecoin and were as of yet unsure whether it was a security or not. With all the recent hubbub regarding major partners like Visa, Paypal and Mastercard dropping out, this is already a fragile time for the project, so it will be helpful to have some clarity in this regard.
Future Perspective Shift?
In other Ether-related news, in a recent interview CoinTelegrpah, Bitcoin expert Tone Vays continued to voice his open belief that Ethereum is an unstable project. As he says, Ethereum has approximately 20% dominance when it really shouldn’t. If people suddenly realize that it can’t scale properly, just as some updates are being implemented, this money will naturally move into Bitcoin. This is an interesting prediction, because a major shift into Bitcoin could be the catalyst for the next big bull run.
Until now, many have thought of positive developments for one coin as being helpful for all coins, but this could change in the future. This perspective that the two most well-known cryptocurrencies are in competition changes the dynamics of the whole sector.