On May 23, Dan Berkowitz spoke on the Unchained podcast and claimed that crypto assets can be both commodities and securities, which contradicts Securities and Exchange Commission Chair Gary Gensler’s opinion that they are all securities with investment contracts. Berkowitz used Ethereum as an example, explaining that it can be a commodity under the CEA and a security, just like a futures contract on Apple stock. This raises questions about compliance efforts for crypto companies and exchanges, especially if regulators are still uncertain about the status of digital assets like Ethereum.
🤔 In crypto, it’s “commodities” vs. “securities.” Former CFTC commissioner Dan Berkowitz says an asset can indeed be both.
🔊 Full episode: pic.twitter.com/zaaB4uSfzN
— Laura Shin (@laurashin) May 23, 2023
Clear as Mud
CFTC Chair Rostin Behnam also spoke about Ethereum and blockchain assets in a Bloomberg podcast on May 23. Behnam was asked whether the logic that applied to viewing Ethereum as a commodity could be applied to other layer-1 blockchain assets like Solana. He replied that there were two listed futures contracts for BTC and ETH, which was a market-driven effort by exchanges and client demand. This had nothing to do with whether they were commodities or securities, he said, adding that there was a lot of legal analysis and dialogue with the CFTC before such products could be listed. Behnam stated that they examine the characteristics of a financial asset to ensure that it complies with the law and falls within the definition of a commodity and more importantly, is not a security.
“If you look up the definition of a commodity under the CEA, nearly everything is a commodity, including securities,” he added.
How do you regulate crypto? Is it a security, a commodity, or something else? CFTC Chair Ros Behnam gets into this and more on this Odd Lots episode, recorded live at the ISDA annual meeting
— Bloomberg Crypto (@crypto) May 21, 2023
Regulatory Pressure Continues
Despite the ongoing uncertainty around regulatory classification, the SEC is cracking down on digital asset firms. Until federal agencies can define digital assets with guidance from Congress, regulatory uncertainty in the US will continue, driving talent, innovation, and investment overseas.
