It was bound to happen sooner than later.
The U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission are at odds over cryptos.
Trying to figure out how to classify Ethereum is the main issue for now. The CFTC’s commissioner, Brian Quintenz, is calling for the SEC to make clear whether the crypto should be treated as a security.
Observers have noted that defining ether as a security could create uncertainty in the space.
CFTC puts ball in SEC’s court
While Bitcoin leads Ethereum in terms of market value, it’s Ethereum that’s become a focus of the CFTC. This week at the Consensus 2018 conference, Quintenz expressed concern about the SEC not stepping up to provide clear guidance on treating Ethereum as a security.
A working committee consisting of people from the SEC and CFTC has been set up to address the matter. Members have been grappling with determining if ether should have been registered as a security with the SEC when it was first issued in 2014.
As reported by the Wall Street Journal:
Ether’s supporters contend that the digital currency’s network is sufficiently decentralized, like bitcoin, to be categorized as a commodity. If that’s the case, neither federal markets regulator would have direct jurisdiction over the cryptocurrency.
Commodity or security
According to the Journal, Ether’s founders didn’t register the 2014 sale with the SEC as required. They went ahead and sold the coins to anyone willing to buy it, the Journal notes.
Ether was originally thought of as a securities offering. However, its usage now makes it a commodity, according to Quintenz. He said:
“You have to regulate what exists in the market, and if things change, you need to recognize that things have changed. But if someone has issued, through an [initial coin offering], a security, then that was an unregistered security sale and the SEC deserves to be able to have jurisdiction over that and if necessary, prosecute.”
A determination could come as early as this week, but officials have been mum in stating exactly when, if any, action could be taken.
Now, ether holders must sit back and wait to see how regulators will treat the crypto. A worry is that if it is determined to be a security, panic selling will ensue.