Former Commodity Futures Trading Commission (CFTC) Commissioner Dan Berkovitz recently raised an intriguing question regarding Ethereum (ETH) and its regulatory status. According to Berkovitz, Ethereum’s special nature could put it in a unique situation, making it part of commodity and securities industry. During a recent episode of the Unchained podcast hosted by Laura Shin, Dan Berkovitz, former General Counsel at the Securities and Exchange Commission (SEC), raised the possibility that ETH, Ethereum’s parent token, could technically fall under the jurisdiction of both regulatory agencies. bodies.
Dan Berkovitz says ETH can be both a value and a commodity under US law – Source: Youtube
The regulatory ambiguity surrounding Ethereum: a double classification between convenience and security?
The issue of Ethereum’s regulatory classification has caused ongoing confusion, largely due to conflicting statements from the CFTC and the SEC. Over the past few months, the CFTC has regularly considered Ether and several other cryptocurrencies as commodities. In contrast, the SEC, led by Gary Gensler, avoided classifying Ether separately, saying at an April regulatory hearing that all cryptocurrencies except Bitcoin should be considered securities.
The idea that Ethereum could simultaneously qualify as a commodity and a security may seem paradoxical at first. However, Dan Berkovitz argues that the embedded legal definitions of commodities and securities effectively allow an asset to be classified in both categories. A commodity is not limited to physical units such as wheat or oil; it includes anything included in a “futures contract,” hence the term “futures” used by the CFTC. In contrast, a security, as defined by the Securities and Exchange Act, may also be the subject of a futures contract, thereby placing it under the jurisdiction of the CFTC.
“The law is clear. Something can actually be both a commodity and a security.” Dan Berkovitz (Source: Youtube)
The implications of Ethereum’s dual regulatory classification on its oversight and coordination between the CFTC and the SEC
The CFTC is primarily responsible for regulating commodity futures and swaps, while the SEC focuses exclusively on securities regulation. However, if an asset is recognized as both a commodity by the CFTC and a security under the parameters of the SEC, dual jurisdiction for both regulators becomes plausible.
This situation raises important questions regarding proper supervision and regulation of Ethereum. If Ethereum was considered both a commodity and a value, it would have a significant impact on its ecosystem, users and investors. In addition, it may require close coordination between the CFTC and the SEC to ensure consistent and effective regulation.
Sources: cointelegraph, coinacademy