CFTC and SEC, two potential leading crypto regulators in the US, disagree on Ether’s legal status. Both agencies have always had conflicting views as regards cryptocurrency.
CFTC claims crypto is a “currency.” They lack the authority to regulate currencies but can regulate the derivatives such as “Futures” and “Options.”
On the other hand, SEC claims crypto is a “security.” Although the crypto coins do not fall into this category, they target ICOs and DeFi products.
The Past Conflict Between CFTC & SEC
Token sequencing has been a contentious — and continuous — issue for regulators lobbying for jurisdiction for a while now.
In 2018, the SEC’s director declared that the regulator didn’t want to categorize Ether as security at the time.
Recently, Gensler appeared to backtrack, suggesting that staking ETH’s fixed-income-like returns are consistent with securities classifications. Consequently, Ether dipped by 11% after his remarks.
The SEC is infamous for targeting tokens for unregistered security offerings via enforcement actions.
In June, they brought an allegation of insider trading against former Coinbase employees. They also charged Ripple Labs — the issuer behind the XRP token — with an unregistered security offering of $1.3 billion.
CFTC also goes hard on crypto institutions. They have previously outlined some enforcements on crypto in their year-end report.
Now, both CFTC and SEC are targeting Ether.
CFTC & SEC Disagree on Ether
The chairman of the CFTC, Rostin Behnam, said that he and SEC head Gary Gensler may not concur with the nature of Ether.
“Ether, I’ve suggested that it’s a commodity,” Benham declared at an event in New York City hosted by Rutgers University. He said, “I know Chairman Gensler thinks otherwise — or at least hasn’t certainly declared one or the other.”
He also noted, “I get very irritated when folks start to talk about the CFTC as a more favorable regulator.” This was in response to the discussion over enhancing the CFTC’s authority.
Benham then ‘warned’ that they would not be ‘light touch’ if they attained crypto oversight power.
Gensler, to his credit, supports the CFTC expanding its power over digital assets beyond just futures and derivatives.
Even with the uncertainty, some financial institutions (like Fidelity Digital Assets) are still launching their Ether products. A spokesperson for the company said it’s because ETH satisfies Fidelity’s standard for listed assets.
Conclusion
There is a continual debate surrounding the global regulation of crypto. Government bodies and financial agencies have passed some laws in that regard.
CFTC and SEC, the two leading financial regulatory bodies in the U.S., are at loggerheads on their view of crypto.
This disagreement against the nature of Ether is the latest on a long list of CFTC vs SEC issues.
Yet, both bodies maintain that they are dedicated to working together to establish regulations around digital assets.
