The absence of a clear regulation to cover the US crypto market creates ambiguity towards some digital assets such as Ether.
The absence of regulation affects almost all crypto market projects, be it tokens like Ether or exchanges like Coinbase. Two regulatory agencies claim the right to rule over this type of digital asset, which increases uncertainty.
The Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) are the two self-proclaimed governing bodies. The former is in an aggressive crusade against companies of all kinds. Although the SEC has claimed sovereignty over the crypto sector since 2018, it was only recently that they sharpened their campaign.
How Does the Absence of Regulation Affect Tokens Like Ether?
The absence of clear regulation leads to tokens like Ether getting caught in the crossfire of traditional regulatory agencies. Consequently, if there is a definitive regulation, crypto projects would know what to expect and what steps they should take to avoid non-compliance.
Meanwhile, crypto market projects such as token issuers must act as if they were commodities and securities at the same time. This is a difficult balance since considering one way and the other at the same time would considerably limit the existence of these projects and their interaction with the public.
Be that as it may, tokens like Ether can be interpreted under the laws of each agency, and that reality will continue, as long as the regulatory absence is maintained. Technically, some experts say, the native token of the Ethereum Blockchain can be considered a commodity or a security.
ETH is a Commodity and a Security at the Same Time
The expression “neither hay nor grass” does not apply to the Ether token when it is considered by the aforementioned regulatory agencies. In the same way that the SEC could penalize the creators of Ethereum, so can the CFTC.
In a recent appearance on the Unchained podcast, former CFTC Commissioner and former SEC General Counsel Dan Berkovitz was emphatic when stating that the native Ethereum token can easily pass as a security and as a commodity. In other words, ETH can be legally subject to the laws of the two agencies simultaneously.
Regulatory confusion over the status of this token leads crypto experts to clamor for clear laws. During the last few months, the CFTC has been classifying ETH and other currencies as commodities. In parallel, Gary Gensler, the head of the SEC stated in April that all tokens, except Bitcoin, can be considered as securities.
According to the former official of these regulatory agencies, the laws leave no room for further interpretation. That means that the token can be perfectly regulated by either of the two agencies that take the first step. “The law is clear. Actually, something can be both a commodity and a security,” he said during the podcast.
This implies that the absence of specific regulation is not a problem for Ether. Consequently, under either scenario, crypto users could face a stiff penalty for breaching established laws.
By Audy Castaneda
