- Dan Berkovitz, a former CFTC Commissioner, says Ethereum lies within the regulatory purview of both the SEC and the CFTC as the debate grows.
- He asserts that digital assets can be categorized as a security and a commodity because of the existing legal framework.
- Crypto executives and users continue to criticise the SEC, calling their regulatory approach “stifling” and harsh.
The debate on the agency with regulatory powers over Ethereum (ETH) in the United States continues with a former Commodity Futures Trading Commission (CFTC) Commissioner dividing the cake into two halves.
Dan Berkovitz, a former CFTC Commissioner and ex-general counsel to the Securities and Exchange Commission (SEC) has stated that ETH can be categorized as a commodity as well as a security based on the details of specific transactions.
Speaking on the Unchained podcast, he claims the digital asset is under the jurisdiction of both Federal agencies suggesting that synergy may be required to effectively regulate digital assets.
“The law is clear. Something can be both a commodity and a security,” he said.
Throwing more light on the topic, Berkovitz noted that ETH not being a physical commodity like “wheat” and “oat” is the genesis of the confusion because anything that is under a “futures contract” can be grouped as a commodity. He explained further that the word “futures” is part of the CFTC’s jurisdiction.
On the other hand, the Securities Act defined securities to include investment contracts stretching it to a “futures contract.” He concluded that since the SEC regulates securities and the CFTC jurisdiction covers futures trading and swaps, both agencies can regulate ETH.
SEC receives knocks, maintains position
The last six months have revealed regulatory confusion in the digital asset market with both the CFTC and the SEC making contradictory claims. The CFTC has called Ethereum alongside other cryptocurrencies commodities.
Gary Gensler-led SEC has stated that cryptocurrencies, except Bitcoin, should be categorized as securities. Gensler’s view has been criticized from all quarters, including in Congress, but the once pro-crypto administrator remains firm on his position.
Criticizing the SEC, Collin Lloyd a partner at Sullivan & Cromwell said at the podcast that no case law suggests ETH on the blockchain can natively be a Security rather, the question should be if it was part of a Security transaction.
”It’s kind of a weird question to be asking, ‘Is this digital asset a security or not?’ I think you should be asking, ‘Is this digital asset being sold as part of a securities transaction?’ That depends on the facts and circumstances,” he added.
