CFTC Executive Urges Federal Agencies in the U.S. to Quickly Clarify Ether’s Status
The cryptocurrency debate seems to be back, and this time it has fallen on ether (ETH) as authorities in the U.S. face pressure to decide whether it should be classified as a cryptocurrency or as a commodity.
Commodity Futures Trading Commission (CFTC) Commissioner Brian Quintenz stated on Monday, May 14 that exchanges have shown interest in providing ether derivatives to their clients.
According to Quintenz, staff members from Securities and Exchange Commission (SEC) and the CFTC have been meeting to discuss whether ether should be classified as a security.
Long-standing Collaboration Between the SEC and the CFTC
It is not the first time that the CFTC and the SEC are working together. They teamed up earlier to combat cryptocurrency fraud and to make sure that there is fairness in the securities market and that investors are protected.
In March 2018, the CFTC released a document in which it stated that it would reward anyone who came forward with information that could help bring to justice to actors in the market, that are responsible for pumps and dumps.
A federal judge recently ruled that bitcoin and other cryptocurrencies can be regulated as commodities in a court case involving a fraud lawsuit filed against a firm called Coin Drop Markets which was founded by Patrick McDonnell. The ruling reinforced the CFTC’s determination of cryptocurrencies as commodities in 2015.
Matters Regarding Timeline
During his speech at a Consensus in New York, Quintenz told reporters that there are a lot of significant issues that need to be dealt with. He revealed that they are working on sorting them out although they did not have a definite timeline. However, he hinted that it might take a few months rather than days, given the lengthy decision-making process in the case of ether.
The SEC and the CFTC have spent months trying to put an end to the jurisdictional issues that have been revolving around cryptocurrencies as the global appetite for these digital currencies rises. The SEC argued that most of the Initial Coin Offerings (ICOs) are categorized under unregistered securities. The CFTC gave the green light for bitcoin futures in December 2017.
Implications of Ether Being Categorized as a Security
One of the reasons why the talks pertaining the whether or not ether should be classified as security are taking long is because it is a highly sensitive price topic. The price of ether might dive if the SEC classifies it as a security. This might end up causing heavy losses especially for retail investors who have been betting on the cryptocurrency.
The reason for the expected decline if the regulatory authority decides to classify ether as security is the fact that none of the significant cryptocurrencies based in the U.S. are registered as securities exchanges with the SEC.
Brian Quintenz. Source: Twitter
Ether’s current market cap is approximately $70 billion according to CoinMarketCap. However, such staggering figures have raised concerns from regulatory watchdogs who have been trying hard to bring some regulation into the cryptocurrency market with the goal of making it safer for investors. This is in light of the increasing instances of fraud in the industry.
Quintenz stated that there is some degree of clarity and certainty required in the cryptocurrency market. He also added that there is demand for a product tied to ether from the market as well as from the exchanges.