- The CFTC is considering listing BTC, ETH and USDT as commodities.
- Gary Gensler had advocated treating BTC as a commodity.
- If these three are classified as commodities, they are regulated by the CFTC.
Bitcoin, Ethereum and Tether were created to build a decentralized financial system. This may not be possible if the SEC regulates it. But it will remain so even if the CFTC regulates it…
Yes, the CFTC is considering listing these unique digital assets as commodities.
The CFTC has filed a fraud complaint in the US District Court for the Southern District of New York against Sam Bankman-Fried, Alameda Research and FTX. The indictment notes that digital assets such as Bitcoin (BTC), Tether (USDT) and Ethereum (ETH) are commodities.
According to the CFTC, a digital good can be stored and transmitted electronically and has defined rights of use and ownership. Virtual currencies fall under the category of digital assets such as BTC, ETH, and USDT, which act as digital representations of value that function as a medium of exchange, a store of value, and a unit of account.
“Certain digital assets are ‘commodities’ including BTC, ETH, USDT and others…”
In the complaint, the CFTC alleges that SBF and the companies it founded misappropriated user funds. SBF, along with other FTX executives, took millions of dollars in poorly documented loans from Alameda, which were then used for luxury home and real estate purchases and political donations.
SBF was arrested by Bahamian authorities on December 12, 2020 and is being held in custody until February 8, 2023. Then the extradition hearing will take place. The US Attorney’s Office for the Southern District of New York had filed an indictment charging SBF with one count of conspiracy to commit money laundering, one count of conspiracy to embezzle US and campaign finance laws, and six counts of fraud. That means a total of eight counts so far.
Gary Gensler, chairman of the US Securities and Exchange Commission, has made a strong case for treating bitcoin as a commodity rather than a cryptocurrency.
“Bitcoin — that’s maybe a commodity token that has a lot of market value, but that’s going over there,” the SEC chairman told the House Appropriation Committee on May 18, 2020.
Former SEC Director William Hinman previously said that Ethereum should be treated as a commodity, but backed off from his statement, saying the SEC was unsure about ETH’s status. Ripple CEO Brad Garlinghouse summed up the situation and criticized the SEC’s flippant approach to regulation. He said if such ambiguous signals persist, “how is the market supposed to have clarity?”
In 2018, Bill Hinman said ETH is not a security and Jay Clayton agreed. But just a few weeks ago, Hinman filed an affidavit in court saying the SEC still has “not taken a position or expressed an opinion” on the status of ETH… so how is the market supposed to have clarity?! https://t.co/FRAlsfcLoG
— Brad Garlinghouse (@bgarlinghouse) August 4, 2021
When asked about his views on commodities, the SEC Chairman said:
“A commodity would be a product like ‘corn or wheat or gold or oil’ which is not backed by one party and which the public does not expect based on the efforts of that one party.”
If BTC, ETH, and USDT were treated as commodities, they would fall under CFTC jurisdiction. This does not bode well for crypto’s status as decentralized assets. While it might make crypto appear safer, the fundamental goal behind the creation of these assets would still be debated.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while in college. He is a keen eye for detail and shares his passion for writing with his work as a developer. His backend knowledge of blockchain helps bring a unique perspective to his writing
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