US Commodity Futures Trading Commission defines Ether as commodity

Debate continues to rage as to which cryptocurrencies should be defined as commodities or securities


The US Commodity Futures Trading Commission (CFTC) has once again described Ether, the cryptocurrency of the Ethereum blockchain, as a commodity. 

In a legal action brought against Sam Bankman-Fried and his two firms FTX and Alameda Research, the regulator said: 

“A digital asset is anything that can be stored and transmitted electronically and has associated ownership or use rights. Digital assets include virtual currencies, such as bitcoin (BIC), ether (ETH), and tether (USDT), which are digital representations of value that function as mediums of exchange, units of account, and/or stores of value.” 

Notably, it maintained: “Certain digital assets are ‘commodities,’ including bitcoin (BTC), ether (ETH), tether (USDI) and others, as defined under Section 1a(9) of the Act, 7 U.S.C. § la(9).”

A security or commodity?

The filing is the latest demonstration of the extent to which authorities in the United States have yet to agree on how some of the most popular cryptocurrencies should be defined. 

The debate has centred on whether certain coins constitute commodities or securities. 

It is widely thought that Bitcoin, the world’s first and largest cryptocurrency, would be regulated as a commodity. However, attitudes towards other projects are more divergent. 

The chair of the US Securities and Exchange Commission, Gary Gensler, has maintained throughout 2022 that Bitcoin is the only cryptocurrency that could be considered a commodity, given its level of decentralisation.

At one point, Gensler’s attitudes towards ether were thought to be mellowing, however, Ethereum’s shift to a proof-of-stake mechanism arrested this. 

Gensler argued that  cryptocurrencies and intermediaries that operate under this system could satisfy the Howey test for what constitutes a security because “the investing public is anticipating profits based on the efforts of others.”

The CFTC’s latest filing has come as a surprise to some, given that the organisation’s own commissioner, Rostin Benham reportedly suggested that Bitcoin is the only crypto asset that should be viewed as a commodity. 

Greater clarity for investors, businesses and regulators may be provided in the coming weeks with the conclusion of the SEC’s lawsuit with Ripple Labs. The regulator claimed that the firm’s issuance of its XRP token amounted to an unregistered securities offering.

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