By George WardEther’s regulatory status is being contested between the leadership of the US’s two federal market regulators. The head of the Commodity Futures Trading Commission (CFTC), Rostin Behnam, suggested on a panel on Monday morning that he and Securities and Exchange Commission (SEC) Chair Gary Gensler may disagree on Ethereum’s regulatory status.
This categorization would determine which agency has more power over it. The CFTC chair sees Ether as a commodity — not security. Ether remarkably dipped by 11% following Gensler’s positional statement suggesting that fixed-incomes like yields on staking Ether are consistent with securities’ classifications.
Gensler and the SEC usually seek to identify unregistered tokens and take legal action against companies offering such tokens. Four months ago, it leveled charges against ex-Coinbase staff over allegations of insider trading.
Nevertheless, CFTC Chairman Heath Tarbert stated that the CFTC is working with the SEC on rules regarding cryptocurrency classification. Furthermore, the CFTC chair hinted that his commission might allow Ether futures to trade on US markets.
Settling The CFTC And SEC Disagreement
In a recent interview, a senior CFTC official stated that there are terms and conditions on which the CFTC would accept the Ethereum futures contract. However, Tarbert also voiced his concerns about currencies created by hard forks, adding that the treatment of each new coin should depend on its creation.
The chairman said: “If the underlying digital asset hasn’t been determined to be a security. It is, therefore, a commodity. Hence, the forked asset will share similar status. They can only differ when the fork itself raises some securities law issues based on the Howey Test.”
While the issue has still not reached an agreement, Tarbert stated that the financial watchdogs are yet to categorize stablecoins as security or commodities. Despite the uncertainty in the categorization of the token, financial institutions still indulge deeply in Ether products.
For instance, Fidelity Digital Assets, in a recent announcement, stated plans to roll out Ether trading for institutional clients by the end of the month. Despite these regulatory authorities’ mismatched view of Ether, there is an interconnection between securities and commodities.
A judicial regulatory body stepped in to clarify the disagreements of views between the CFTC and SEC. The Responsible Financial Innovation Act, introduced in June, opined placing most crypto assets under the CFTC’s regulatory purview unless a court states otherwise.