Commodity

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May 10, 2024 Coin Telegraph

CFTC

The Financial Innovation and Technology for the 21st Century Act passed out of committee in July 2023 but could be headed for a full floor vote in the U.S. House of Representatives.

Lawmakers with the United States House Financial Services Committee announced they are preparing for a full floor vote of the Financial Innovation and Technology for the 21st Century Act, also known as FIT21.

In a May 10 announcement, House Financial Services Committee Chair Patrick McHenry said the full chamber could be clear for a vote on the FIT21 bill “later this month” after consideration in the House Committee on Rules. The bill, passed out of committee in July 2023, seeks to clarify the roles the U.S. Commodity Futures Trading Commission (CFTC) and Securities and Exchange Commission (SEC) would have in regulating digital assets.

“After tirelessly working across the aisle and across the nation over the past year to craft a clear, pragmatic regulatory framework for digital assets, I am proud that this landmark legislation is coming to the House Floor,” said Representative French Hill. “As the collapse of FTX demonstrated, we need strong consumer protections and a functional regulatory framework to ensure the rapidly growing digital asset ecosystem is safe for investors and consumers while securing America as a leader for blockchain innovation.”

Uniswap lawsuit judge calls Ether a commodity in dismissal order

August 31, 2023 Coin Telegraph

CFTC

United States District Court Judge Katherine Polk Failla is also the judge overseeing the SEC's lawsuit against crypto exchange Coinbase.

A United States District Court judge has called Ether (ETH) a commodity in her dismissal of a class action lawsuit against the decentralized exchange Uniswap.

In an Aug. 30 dismissal order of the case brought by Uniswap users who claimed they lost money due to scam tokens on the exchange — Judge Katherine Polk Failla wrote ETH and Bitcoin (BTC) were “crypto commodities.”

The distinction was also part of her reasoning for dismissing the case — Failla said she wasn’t convinced by an argument that Uniswap’s token sales were subject to the Exchange Act.

Interestingly, Failla is also the judge overseeing the SEC lawsuit against Coinbase. She has also had previous experience in overseeing other crypto cases in the past, including one involving Tether and Bitfinex.

The SDNY (Failla, J.) also explicitly found in its August 29 decision in Risely v. Uniswap that

Ethereum is a commodity, not a security.

No analysis of the issue, just the conclusion, but still, pretty definitive statement if you ask me.

pic.twitter.com/KEc5Pf5kTC
— Bill Hughes : wchughes.eth (@BillHughesDC) August 30, 2023

While her comment is not a distinct ruling on Ether’s legal classification in the U.S., it comes as other judges have made decisions on cryptocurrencies such as a July ruling classing XRP (XRP) as a security when sold through programmatic sales on exchanges.

In recent years, two U.S. financial regulators, the Securities and Exchange Commission and the Commodity Futures Trading Commission have tussled over jurisdiction concerning cryptocurrencies.

SEC chair Gary Gensler had once claimed “everything other than Bitcoin” is a security under his agency’s remit.

Meanwhile, the CFTC has laid claim to ETH and other cryptocurrencies as commodities — per a suit it filed against Binance in March for alleged Commodities Exchange Act violations.

However, U.S. lawmakers are yet to decide how the SEC or CFTC will be handed authority over crypto.

Multiple bills to provide digital asset regulatory clarity are inching their way through Congress which vary in how to divvy authority between the two regulators.

Some, such as the Financial Innovation and Technology for the 21st Century Act, aim to create a process for categorizing cryptocurrencies into either securities or commodities.

Others explicitly hand power to a regulator such as the Digital Commodity Exchange Act which sees crypto spot exchanges registered and regulated under the CFTC.

The Digital Asset Market Structure Bill, meanwhile, would see cryptocurrencies undergo SEC certification to prove adequate decentralization before being given commodity status.

Magazine: DeFi Dad, Hall of Flame: Ethereum is ‘woefully undervalued’ but growing more

XRP price tags 10-month high — Can a 35% pullback be avoided?

March 29, 2023 Coin Telegraph

Binance

A U.S. regulator called Bitcoin, Ether, and Litecoin commodities in its court filing against Binance. It did not mention XRP anywhere.

XRP (XRP) outperformed its top-ranking crypto rivals over the past 24 hours while reaching the highest price in 10 months.

XRP price tags 10-month high

On March 29, XRP's price surged by nearly 15% to $0.58, its highest level in ten months, outperforming Bitcoin (BTC) and Ether (ETH) in the past 24 hours that rose around 4.5% and 2.75%, respectively.

*XRP/USD daily price chart. Source: TradingView*

The Commodity Futures Trading Commission (CFTC) referred to Bitcoin, Ether, and Litecoin (LTC) as "commodities" in its court filing against Binance. While the U.S. regulatory didn't name XRP, many assumed the token would be categorized as a commodity.

The lawsuit will likely conclude by the end of March, with legal experts believing Ripple has a chance to win. XRP price has rallied 45% month-to-date on similar hopes, including the March 29 price rally, supplemented further by investors' optimistic interpretation of the CFTC court filing.

#XRP bucks the market trend with 8% surge to a 5 month high of under $0.50#CFTC's #Binance filing could classify $XRP as a commodity instead of a security as alleged by #SEC in #Ripple vs SEC case@Ripple's CTO argument gains traction and XRP price impacted by case progression pic.twitter.com/eFB28Ehmj0
— LaCryptoLycus (@CryptoLycus) March 28, 2023

35% XRP price correction ahead?

XRP's price rally brought it closer to the breakout target of $0.60. However, the possibility of a big correction after the SEC vs. Ripple ruling as a "sell the news" event remains.

Related: Why is XRP price up today?

Technical indicators also show the XRP/USD pair facing the upper trendline of its prevailing rising channel. Thus, a correction toward the lower trendline is now in play, with the downside price target around $0.38 in April, down 35% from current price levels.

On a broader timeframe, the rising channel appears like a bear flag, a bearish continuation technical indicator.

*XRP/USD weekly price chart. Source: TradingView*

The completion of the flag pattern could see XRP price falling to $0.189 by June, down over 65% from current price levels

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

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CFTC declares Ether as a commodity again in court filing

December 14, 2022 Coin Telegraph

Alameda

The community is hopeful that the assertion by the CFTC will put to bed claims that staked coins are securities according to the Howey Test.

The Commodity Futures Trading Commission (CFTC) has again labeled Ether (ETH) as a commodity in a Dec. 13 court filing — in contrast to statements from chief Rostin Behnam on Nov. 30 suggesting that Bitcoin was the sole cryptocurrency that should be viewed as a commodity.

According to the CFTC, as per their filing today, ETH is a commodity. This really should put any security designation to rest. pic.twitter.com/PkHWredNK4
— Hal Press (@NorthRockLP) December 13, 2022

In its lawsuit against Sam Bankman-Fried, FTX, and sister company Alameda Research, the regulator on multiple occasions referred to Ether, Bitcoin (BTC) and Tether (USDT) "among others" as "commodities" under United States law.

“Certain digital assets are “commodities,” including bitcoin (BTC), ether (ETH), tether (USDT) and others, as defined under Section 1a(9) of the Act, 7 U.S.C. § 1a(9).”

However, there appears to be some disagreement within the CFTC itself regarding whether Ether should be viewed as a commodity or not, at least in recent weeks.

During a crypto event at Princeton University on Nov. 30, CFTC chief Rostin Benham reportedly suggested that Bitcoin is the only crypto asset that should be viewed as a commodity — walking back previous comments which asserted that Ether may also be a commodity.

The chairman of the Securities and Exchange Commission, Gary Gensler has also had an undetermined stance on Ether in recent months.

In an interview with Jim Cramer during the hosts' Mad Money show on Jun. 27, Gensler confirmed that Bitcoin was a commodity adding: “That's the only one I'm going to say.”

Gensler has previously suggested Ether was a security after its initial coin offering but had become more decentralized and turned into a commodity since then.

In September, his stance appeared to have shifted again after Ether’s transition to proof-of-stake (PoS), when he argued that staked tokens may constitute securities under the Howey test.

The designation of crypto assets in the U.S. is particularly important, as the CFTC regulates commodities futures while securities like bonds and stocks are regulated by the Securities and Exchange Commission (SEC).

Crypto skeptic Senator Elizabeth Warren is reportedly working on a bill that would give the SEC most of the regulatory authority over the crypto industry, and Intercontinental Exchange Inc CEO Jeffrey Sprecher is also confident that crypto assets will be handled like securities — suggesting at a financial services conference on Dec. 6 that this would result in greater consumer protections.

Belgium has taken a different stance on the designation however, with its Financial Services and Markets Authority asserting in a Nov. 22 report that Bitcoin, Ether and other crypto assets issued solely by computer code do not constitute securities.

Belgium says BTC, ETH and other decentralized coins are not securities

November 25, 2022 Coin Telegraph

Belgium Financial Services and Markets Authority

Belgium's take on what conditions must be met in order for a crypto asset to be classed as a security are in contrast to the views of U.S. Securities Exchange Commission Chairman Gary Gensler.

Belgium’s financial regulatory body has confirmed its position that Bitcoin (BTC), Ether (ETH) and other cryptocurrencies that are issued solely by computer code do not constitute securities.

The explanation came from Belgium's Financial Services and Markets Authority (FSMA) in a Nov. 22 report, a draft of which was opened for comment in Jul. 2022.

The clarification comes following an increase in demands for answers as to how Belgium’s existing financial laws and regulations apply to digital assets, according to the FSMA.

While not legally binding under Belgium or European Union law, the FSMA stated that under its “stepwise plan,” cryptocurrencies would be classed as a security if it was issued by an individual or entity”:

“If there is no issuer, as in cases where instruments are created by a computer code and this is not done in execution of an agreement between issuer and investor (for example, Bitcoin or Ether), then in principle the Prospectus Regulation, the Prospectus Law and the MiFID rules of conduct do not apply.”

The Belgian regulatory body noted that cryptocurrencies which are not categorized as securities may still be subject to other regulations if a company uses the digital asset as a medium of exchange:

“Nevertheless, if the instruments have a payment or exchange function, other regulations may apply to the instruments or the persons who provide certain services relating to those instruments.”

FSMA also noted that its stepwise plan is neutral to the technology — suggesting that it’s irrelevant whether digital assets exist and are facilitated on a blockchain or through other traditional means.

The FSMA first drafted the report in Jul. 2022 as a means to address frequently asked questions by Belgian-based issuers, offerers and service providers of digital assets.

FSMA stated that the stepwise plan would serve as a guideline until the European Parliament’s Markets in Crypto Assets Regulation (MiCA) is adopted, which is expected to take effect at the start of 2024..

Belgium’s clear guidelines are in contrast to the “regulation by enforcement” approach taken by the U.S. Securities Exchange Commission’s (SEC) which is currently vying for digital asset regulatory control with the U.S. Commodity Futures Trading Commission (CFTC).

While SEC chairman Gary Gensler has long considered BTC to constitute a commodity, he’s recently argued that post-Merge ETH and other staked coins may constitute a security under the Howey test.

Belgium hasn’t been a huge adopter of digital assets to date, with a recent study from blockchain data platform Chainalysis ranking Belgium 94th in its Global Crypto Adoption Index.

Residents in the European country have access to 10 crypto exchanges, according to data from crypto data resource Bitrawr.

Ether staking could trigger securities laws — Gensler

September 16, 2022 Coin Telegraph

Blockfi

Though he did not specify any particular crypto, SEC chair Gary Gensler said proof-of-stake cryptocurrencies could be subject to securities laws.

Ethereum’s upgrade to proof-of-stake may have placed the cryptocurrency back in the crosshairs of the Securities and Exchange Commission (SEC).

Speaking to reporters after the Senate Banking Committee on Sept. 15, SEC chairman Gary Gensler reportedly said that cryptocurrencies and intermediaries that allow holders to “stake” their crypto may define it as a security under the Howey test, according to The Wall Street Journal.

“From the coin’s perspective […] that’s another indicia that under the Howey test, the investing public is anticipating profits based on the efforts of others,” WSJ reported Gensler as saying.

The comments came on the same day as Ethereum's (ETH) transition to proof-of-stake (PoS), meaning the network will no longer rely on energy-intensive “proof-of-work” mining and instead, allows validators to verify transactions and create new blocks in a process that involves “staking."

Gensler said that allowing holders to stake coins results in “the investing public anticipating profits based on the efforts of others.”

Gensler went on to say that intermediaries offering staking services to its customers “looks very similar — with some changes of labeling — to lending.”

The SEC has previously said they didn’t see ETH as a security, with both the Commodity Futures Trading Commission (CFTC) and the SEC agreeing that it acted more like a commodity.

The SEC has been keeping a close watch on the crypto space, particularly those that it alleges are securities. The regulator has been embroiled in a case against Ripple Labs concerning the launch of the XRP token.

The SEC has also pushed firms offering crypto lending products to register with them, including a $100 million penalty directed at BlockFi in February for its failure to register high-yield interest accounts that the SEC considers securities.

Gabor Gurbacs, director of digital assets strategy at American investment firm VanEck, tweeted to his 49,300 followers that he had been saying for over six years "that POW to POS transitions can draw regulatory attention."

To be clear, I am not saying that ETH is necessarily a security because of its proof model, but regulators do talk about staking in the context of dividends which if one feature of what securities laws call a "common enterprise". There are other factors in the Howey test too.
— Gabor Gurbacs (@gaborgurbacs) September 15, 2022

Gurbacs went on to clarify that regulators refer to rewards from staking as dividends, which is a feature of the Howey test.

The Howey Test refers to a Supreme Court case in 1946 where the court established whether a transaction qualifies as an investment contract. If it does, then it would be considered a security and is covered by the Securities Act of 1933.

XRP price tags 10-month high

35% XRP price correction ahead?

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