The future of Ethereum, the world’s second-largest cryptocurrency, has become murky as two major regulatory bodies spar over how to classify the pioneering blockchain technology. Allegations from the Commodity Futures Trading Commission that digital assets like Ether are commodities have put the agency at odds with the Securities and Exchange Commission, which is actively investigating whether to define Ethereum’s native token as a security.
This interagency feud bubbled to the surface during the CFTC’s recent filing against KuCoin, one of the largest crypto exchanges. “The complaint charges KuCoin illegally dealt in off-exchange commodity futures transactions and leveraged, margined, or financed retail commodity transactions.” In its complaint, the derivatives regulator explicitly labeled Bitcoin, Ethereum, Litecoin, and stablecoins like USDC and USDT as commodities under law. But simultaneously, the SEC is drilling down on the Ethereum Foundation itself over Ether’s status.
Prominent crypto lawyer Jake Chervinsky slammed the CFTC’s commodity claims as “savage” pushback against the SEC’s Ethereum inquiry. Fox Business reporter Eleanor Terrett likewise flagged the developments’ significance amid the SEC’s broader crypto crackdown.
Congressional Pressure: Letter Regarding Ethereum to SEC Chair
On Capitol Hill, top Republicans are piling pressure on SEC Chair Gary Gensler over the haziness. In a letter, leaders of the House Agriculture and Financial Services committees blasted the lack of clarity after Prometheum, a broker-dealer regulated by the SEC, announced plans to offer custody services for Ether. The lawmakers warned such a move could “irreparably” disrupt digital asset markets given the precedent that Ethereum is not a security.
Their missive took aim at Gensler’s refusal to share his agency’s stance on Ether, accusing him of fueling confusion in the crypto wild west. It questioned if the SEC would proactively address misconduct by broker-dealers like Prometheum and demanded guidance on which digital tokens count as securities.
The letter reads:
Your unwillingness to clarify the treatment of ETH only exacerbates the confusion and uncertainty regarding ETH’s classification as demonstrated by the Prometheum announcement.
For the crypto world, the mounting concerns investors fear that a regulatory crackdown could be imminent for Ethereum and its ecosystem of decentralized apps and services. All eyes are now to see which path regulators ultimately choose for Ethereum’s innovative but unruly blockchain.
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