IS ETH A COMMODITY OR NOT? REGULATORY AGENCIES SET TO DECIDE
The SEC and the CFTC laws will decide on whether or not Ether, the second largest cryptocurrency, is a security on Monday May 7th, 2018. The question boils down to how the ICO for ETH, which raised $18 million through 31,000 Bitcoins collected, was executed. The CFTC, or “Commodities Futures Trading Comission”, regulates futures and options markets in the United States and guards against fraudulent conduct.
Ethereum is a network that was created by Vitalik Buterin. The pre-sale or “Initial Coin Offering” was conducted in 2014. Ether is the “gas” or fuel that powers the projects hosted by the Ethereum network. Ether is traded under the symbol “ETH”, and its value fluctuates daily.
After studying the token pre-sale and the ICO, cryptocurrency experts at Coin Center state that ETH is definitely not a security and therefore was not required to registered with the SEC. As ETH is used as “gas” on the network for deploying smart contracts and other projects with real-world use, it is not a security and should not be judged as such.
There are three possible outcomes of the regulatory meeting on Monday.
1. The FTC and CFTC declare ETH to be a security, outright
This would be the worst-case scenario for the crypto asset community. It is the least-likely scenario because the ETH community has a lot of large and powerful members who have the ear of regulators. ETH would probably experience a steep decline along with the vast number of ICOs that have taken off from the ETH platform. The only cryptocurrency that would be safe would be Bitcoin, or any other coin that is transparent, and has not been built on the ETH network.
2. A “Light Action” will be levied against the Ethereum Foundation
The Etherium foundation was created in such a way that they could have sold securities. However, the way ETH is used today is definitely not in a direction of selling securities. A light action could be levied against the foundation, such as a fine or penalty. It would provide a little bit of regulatory clarity as a result and could give a boost to the cryptocurrency market as a whole.
3. The regulators rule flat-out that Etherium is not a security.
If this is announced as the official outcome, it could spark a massive run on the crypto market. If the regulatory agencies go this far in backing off of the Ethereum Foundation, it will give a major confidence boost to investors.
There also could be a scenario where no final decision is made after the meeting with the regulator, but this is not likely according to the experts.
We will be watching closely, and will be ready to discuss the outcome when the news drops! Until then, hold on tight!
The Crypto Pro