2nd Largest Crypto is Commodity According to CFTC

Is cryptocurrency a security or is it a commodity? This is the dark cloud which has loomed over crypto-enthusiasts and regulators over the past year. Recently, CFTC Chairman Heath Tarbert has said ether, the world’s second-largest cryptocurrency by market capitalization, is a commodity.

By calling Ether a commodity, as New York Eastern District Court Judge Jack Weinstein confirmed, it allows “exercise its jurisdiction over fraud that is in no way connected to the sale of futures or derivative contracts.”

Here is the definition of Commodity: (1) A commodity, as defined in the Commodity Exchange Act, includes the agricultural commodities enumerated in Section 1a(4) of the Commodity Exchange Act, 7 USC 1a(4), and all other goods and articles, except onions as provided in Public Law 85-839 (7 USC 13-1), a 1958 law that banned futures trading in onions, and all services, rights, and interests in which contracts for future delivery are presently or in the future dealt in; (2) .A physical commodity such as an agricultural product or a natural resource as opposed to a financial instrument such as a currency or interest rate. 

Why would a cryptocurrency be considered as a commodity and not a security? Can we really claim that a digital asset is similar to an agricultural product? There’s one particular reason that comes to mind.

A serious concern for cryptocurrency is the prevalence of fraud. Each day, governments are digging up clandestine, fraudulent schemes. Recently, Singaporean, Matthew Ho was indicted after allegedly orchestrating his long-running scheme of stealing identities and credit cards to purchase services from major US-based providers Amazon Web Services (AWS) and Google Cloud Services for crypto-mining purposes.

Fraudulent schemes are why cryptocurrencies are defined as a commodity, and not a security. If a cryptocurrency was defined as a security, only the SEC would be able to go after fraudulent cryptocurrency holders. This limits ways in which cryptocurrency could be investigated. If we truly want to live in a world that uses cryptocurrency, we have to allow government enforcement, so we can find the frauds in crypto. Simply put, SEC regulation would not suffice.

Lawkchain.org will be posting more stories and op-eds about fraud in the cryptocurrency world since it is a prevalent and pressing topic that will continue to affect digital assets.

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