Gushiken Yona
The Commodity Futures Trading Commission (CFTC) has potentially undermined the U.S. Securities and Exchange Commission’s (SEC) plans. The CFTC recently filed a complaint against the crypto exchange platform KuCoin, where it designated both Bitcoin and Ethereum as commodities. This classification stands in contrast to the reported intentions of the SEC to classify Ethereum as a security.
In a lawsuit filed against the crypto exchange KuCoin on Tuesday, the futures market regulator classified Ethereum and Litecoin, alongside Bitcoin, as commodities. “During the relevant period, Kucoin solicited and accepted orders, accepted property to margin, and operated a facility for the trading of futures, swaps, and leveraged, margined, or financed retail transactions involving digital assets that are commodities, including Bitcoin (BTC), Ether (ETH), and Litecoin (LTC),” the CFTC lawsuit read.
The recent confirmation by the CFTC that Ethereum is categorized as a commodity could hold substantial sway over the purported ongoing SEC investigation into the classification of the cryptocurrency. This official declaration serves as a clear acknowledgment of Ethereum’s status as a commodity, carrying extensive regulatory ramifications for the digital asset landscape.
The persistent discord between these leading regulatory entities has brought to light pressing questions about the standards applied to differentiate between securities and commodities. This was recently spotlighted by U.S. lawmakers from both the House Financial Services Committee and the House Agriculture Committee, who voiced concerns regarding the SEC’s potential treatment of ETH, particularly, to clarify its position concerning SPBD Prometheum’s custody of ETH.
In a letter dated March 26, addressed to SEC Chair Gary Gensler, lawmakers including the chair of the House Financial Services Committee, Patrick McHenry, and vice chair French Hill, conveyed their concerns.
“Despite this history recognizing ETH as a non-security digital asset, you have consistently refused to acknowledge that ETH is not a security. In your March 2023 testimony before the House Committee on Financial Services, you declined to answer multiple questions about whether ETH should be considered a commodity. Your unwillingness to clarify the treatment of ETH only exacerbates the confusion and uncertainty regarding ETH’s classification as demonstrated by the Prometheum announcement,” the letter read.
“Your unwillingness to identify which digital assets are so-called digital asset securities has sown confusion even for SEC-regulated entities,” the lawmakers underlined. The letter also said, “There are significant challenges for those navigating the digital asset regulatory regime. The current digital asset regulatory landscape presents various risks to consumers, investors, and market participants. Allowing one market participant and regulation by enforcement to dictate the future of digital asset regulation is unacceptable. This is precisely why Congress is working to set guidelines for firms that participate in the digital asset markets.”
