The contradictory stance of the US SEC and the CFTC on Ethereum’s classification raises questions about the criteria for classifying crypto assets.
As opposed to an earlier stance by the United States Securities and Exchange Commission (SEC), the Commodities Futures Trading Commission (CFTC) has classified Ethereum (ETH) and Litecoin (LTC) as commodities. In a lawsuit against the crypto exchange Kucoin on Tuesday, the futures market regulator tagged the two tokens as commodities alongside Bitcoin.
“During the Relevant Period, Kucoin solicited and accepted orders, accepted property to margin, and operated a facility for the trading of futures, swaps, and leveraged, margined, or financed retail transactions involving digital assets that are commodities, including bitcoin (BTC), ether (ETH), and litecoin (LTC),” the CFTC stated in the lawsuit.
Contradicting Stance
The CFTC’s classification of Ethereum as a commodity contradicts an earlier declaration by the SEC on the crypto asset. On March 20, Coinfomania reported that the US SEC was investigating the Ethereum Foundation and trying to classify the crypto asset as a security.
The contradictory stance of the two top regulators raises questions about the criteria by which an asset is classified as either a security or a commodity. In the case against Ripples, the US SEC argued that Howkey’s Law was a fundamental parameter for classifying an asset as either a security or not. However, the Wall Street top regulator has not proven if Ethereum failed or passed the law.
The Tussle Continues
The CFTC’s move to classify Ethereum as a commodity could seriously impact the ongoing SEC investigation into its classification. If need be, the Ethereum Foundation could make a case against the SEC based on the CFTC’s stance on its native token, ETH.
Ethereum barely reacted to the development, with the crypto market seeing a sharp fall following the lawsuit against Kucoin. At press time, ETH is trading at $3,594 with a market cap of $431 billion.
