Speaking on the Unchained podcast on May 23, Dan Berkowitz muddied the regulatory waters even further by stating that cryptocurrency assets can be both commodities and securities.
The notion goes against the opinion of Securities and Exchange Commission Chair Gary Gensler who asserts they are all securities with financing contracts.
Referring to Ethereumย (ETH), he stated thereย is a โspecial caseโ where something can be both. โIt can be a commodity under the CEA [Commodity Exchange Act] and a security, and that would be like a futures contract on a security, which would be like a futures contract on Apple stock.โ
If the regulatoryย authorities are still unclear on the status of digital assets such as Ethereumย (ETH), what hopes do the cryptocurrency corporations and exchanges have with their compliance efforts?
Full episode: pic.twitter.com/zaaB4uSfzN
โ Laura Shin (@laurashin) May 23, 2023
Clear as Mud
CFTC Chair Rostin Behnam likewise faced the burning question in a Bloomberg podcast published on May 23.
Behnam was requested if the logic that applied to viewing Ethereumย (ETH) as a commodity mayย be applied to other layer-1 blockchainย tech assets such as Solana.
He stated there are two listed futures contracts for Bitcoin and Ethereumย (ETH), which was a โmarket-driven effort by exchanges and probably client demandโ and had nothing to do with whether they were commodities or securities.
Behnam alsoย mentionedย that thereย is manyย of legal analysis by exchanges and open dialogue with the CFTC before such products can be listed. This was carried out before approval of the Bitcoin ETF in 2017 and Ethereumย (ETH) ETF in 2020, he stated before adding:
โIn the context of your question of is it a security or commodity, thereย is no doubt that we within the agency and at the staff level examine the characteristics of the financial investment to secure that it complies with the law and that is falls within the definition of a commodity, and more significantly, is not a security.โ
โIf you look up the definition of a commodity under the CEA, nearly everything is a commodity, including securities,โ he added.
How do you regulate cryptocurrency? Is it a security, a commodity, or something else? CFTC Chair Ros Behnam gets into this and more on this Odd Lots episode, recorded live at the ISDA annual meeting
โ Bloomberg Cryptocurrency (@crypto) May 21, 2023
Regulatory Pressure Continues
Inย theย meantime, the SEC, which assumes very few cryptocurrency assets are commodities, persistsย to crack down by enforcement on digital investment firms.
Until these two federal agencies can work together and define digital assets with guidance from Congress, the regulatory uncertainty in the Unitedย States will continue, driving talent, innovation, and financing overseas.
