CFTC Chairman Says Bitcoin and Ethereum Are Commodities: Is the Case Closed?

Crypto Twitter was quick to celebrate Wednesday following Rostin Behman’s congressional testimony, in which the chairman of the Commodity Futures Trading Commission (CFTC) said a recent federal court ruling reaffirmed Bitcoin And Ethereumthe status of merchandise.

While Securities and Exchange Commission (SEC) Chairman Gary Gensler has said that Bitcoin is outside his jurisdiction, regulatory competence of the agencyA cloud of uncertainty persists around the second-largest cryptocurrency, despite the Sudden Approval of Ethereum Spot ETFs in May.

“In its decision, the court reaffirmed that Bitcoin and Ether are both commodities within the meaning of the Commodity Exchange Act (CEA),” Behman said. saidreferring to a fraud case prosecuted by the CFTC in the U.S. District Court for the Northern District of Illinois against an unregistered entity.

Decided by Judge Mary M. Rowland, the defendant in the case argued that the CFTC’s statutory authority to regulate commodities “does not extend to cryptocurrencies.” However, the judge ruled that Bitcoin and Ethereum do fall within the CFTC’s regulatory scope because of the case’s similarity to other cases decided and the language used in the CEA.

But Rowland’s decision and Behman’s quote don’t mean Ethereum’s status is set.

While other courts may consider the lower court’s decision, Rowland’s ruling is not binding in the Northern District of Illinois, much less the rest of the country, said Anthony Tu-Sekine, a partner at Seward & Kissel. Decrypt.

“Whatever happens at the trial court level is not really binding on other courts in that jurisdiction,” he said. “It’s good news, not bad news, but it’s probably not that bad.”

CFTC Officials Ethereum was first described as a commodity in 2019, when then-Chairman Heath Tarbert spoke at Yahoo Finance’s All Market Summit. While the SEC has never claimed that Ethereum is a security, a since abandoned The investigation into “Ethereum 2.0” has raised questions.

When it comes to the intersection of cryptocurrency and securities laws, judges in the same jurisdiction have issued conflicting decisions. For example, in the U.S. District Court for the Southern District of New York, Judge Analisa Torres find in the SEC’s case against Ripple that the sale of certain cryptocurrencies on secondary markets is not subject to securities laws.

“There is another case in the Southern District where the judge disagreed with [Torres’] “conclusion,” Tu-Sekine said, referring to a decision in the SEC’s case against Terraform Labs.

U.S. District Judge Jed Rakoff declined to extend Torres’ reasoning during let the SEC case proceed last summer, citing the Howey Test, a framework set by the Supreme Court that is used to determine whether an asset is a security.

“Howey makes no distinction between purchasers, and it is entirely logical that he did not,” Rakoff wrote. “The court declines to distinguish between these pieces based on their manner of sale.”

However, the SEC implicitly signaled that Ethereum was a commodity when it approved applications for spot Ethereum ETFs in May, Tu-Sekine said.

If an investment vehicle invests in securities, certain regulatory forms are required, which is not currently the case among the asset managers currently competing for a spot Ethereum ETF, Tu-Sekine noted.

Still, Behman’s comments Wednesday were hailed on Crypto Twitter as a major development, as influential accounts like Degen News exploded tweets in capital letters.

“What a time to be alive,” one user said. commented.

Edited by Ryan Ozawa.

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