CFTC says Ethereum is a commodity

The long-awaited verdict is in. The new Chairman of the CFTC has declared today that Etherereum is a commodity, thus leaving the door open to a plethora of newly regulated derivatives products on platforms like the Cboe.

October 10, 2019, | AtoZ MarketsChairman of the Commodity Futures Trading Commission (CFTC), Heath Tarbert says Ethereum’s native token Ether (ETH) is a commodity and may not be classified as a financial security.

Tarbert, who overtook J. Christopher Giancarlo in July, revealed his stance toward cryptocurrencies and forked coins while attending the Yahoo Finance All Markets Summit in New York on October 10.

CFTC declares Ethereum’s Ether a commodity

While the CFTC has been very clear that Bitcoin is a commodity, this is reportedly the first time that the authority has provided a vision for Ether, the second-biggest cryptocurrency by market cap. Tarbert said:

“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.”

“Similar digital assets should be treated similarly”

According to the report, Tarbert acknowledges the existing uncertainty about the status of altcoins. However, he claimed that similar digital assets should be treated similarly.

Tarbert suggested that forked cryptocurrencies such as Bitcoin Cash (BCH) or Ethereum Classic (ETC) — those that derive from the original underlying blockchain — should be treated the same as the original asset. At the same time, the chairman noted that the status of a forked coin may alter if the “fork itself raises some securities law issues under that classic Howey Test.”

Tarbert reportedly claimed:

“It stands to reason that similarly assets should be treated similarly. If the underlying asset, the original digital asset, hasn’t been determined to be a security and is therefore a commodity, most likely the forked asset will be the same.”

Tarbert’s comments are not conclusive

But Tarbert’s comments are not conclusive on the matter of whether ether is a security. As Compound Finance General Counsel Jake Chervinsky pointed out on Twitter,

“The CFTC calling ETH a commodity has nothing to do with securities laws at all. Securities are a type of commodity. Financial instruments can be one, both, or neither. Not to mention that the SEC already said ETH isn’t a security last summer.”

Earlier this year the Commission, which is regarded as being more tolerant toward cryptocurrencies, sought advice about virtual assets, including ether, from developers and entrepreneurs. 

Think we missed something? Let us know in the comments section below.

Share Your Opinion, Write a Comment