- The CFTC plans to list BTC, ETH, and USDT as commodities.
- Gary Gensler had argued for BTC to be treated as a commodity.
- If these three products are classified as commodities, they will be regulated by the CFTC.
Bitcoin, Ethereum and Tether were created to build a decentralized financial system. This might not be possible if the SEC regulates it. However, this will remain the case even if the CFTC regulates it…
Yes, the CFTC is considering listing these unique digital assets as commodities.
The CFTC has filed a fraud complaint in the U.S. District Court for the Southern District of New York against Sam Bankman-Fried, Alameda Research, and FTX. The prosecution notes that digital assets such as Bitcoin (BTC), Tether (USDT), and Ethereum (ETH) are commodities.
According to the CFTC, a digital asset can be stored and transmitted electronically and has defined usage and ownership rights. Virtual currencies fall into the category of digital assets, such as BTC, ETH, and USDT, which function as digital representations of value that function as a medium of exchange, a store of value, and a unit of account.
“Some digital assets are ‘commodities’ including BTC, ETH, USDT and others….”
In the complaint, the CFTC accused SBF and the companies it founded of misusing user funds. SBF, with others FTX leaders, took out millions of dollars in poorly documented loans from Alameda, which were then used to buy luxury properties and real estate, and make political donations.
SBF was arrested on December 12, 2020 by Bahamian authorities and will be in custody until February 8, 2023. That’s when the extradition hearing is supposed to take place. The U.S. Attorney’s Office for the Southern District of New York had issued an indictment charging SBF with one count of conspiracy to launder money, one count of conspiracy to pervert U.S. laws and campaign finance, and six counts of deception. Which means a total of eight counts, so far.
U.S. Securities and Exchange Commission Chairman Gary Gensler has strongly supported treating Bitcoin as a commodity rather than a cryptocurrency.
“Bitcoin – maybe it’s a commodity token, which has a large market value, but goes there” said the Chairman of the SEC before the House Appropriation Committee on May 18, 2020.
Former SEC Director William Hinman previously said Ethereum should be treated as a commodity, but backtracked on his statement, saying the SEC was unsure of ETH’s status. Ripple CEO Brad Garlinghouse summed up the situation by lambasting the SEC’s frivolous approach to regulation. He said that if such ambiguous signals continue, “How is the market supposed to have clarity?”
The SEC Chairman, when asked about his views on commodities, said:
“A commodity would be a product like ‘corn or wheat or gold or oil’ which has a part sitting there behind it and the public is not anticipating based on the effort of that part alone.”
If BTC, ETH, and USDT were to be treated as commodities, then they would fall under the jurisdiction of the CFTC. This will not mean good news for the status of cryptos as decentralized assets. While this may make crypto safer, the fundamental purpose behind creating these assets would still be debated.