CFTC: Bitcoin, Ethereum, and Litecoin Are Commodities

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  • The CFTC has declared Ethereum and Litecoin commodities, aligning them with Bitcoin
  • The classification could set up a potential conflict with the SEC, which has not yet declared that Ethereum is not a security
  • The move adds complexity to the evolving crypto regulatory landscape

The United States Commodity Futures Trading Commission (CFTC) has put itself on a potential collision course with the US Securities and Exchange Commission (SEC) by declaring that Ethereum and Litecoin are commodities alongside Bitcoin. The designation, unearthed as part of last week’s lawsuit by federal prosecutors against KuCoin, means that the CFTC doesn’t see the trio as securities right at a time when Ethereum is being investigated by the SEC over that very assertion. While Bitcoin was already known to be safe from the SEC’s grasp, the introduction of Ethereum and Litecoin has laced the crypto regulatory battle with more intrigue.

Classification May Encourage Institutional Buyers

The CFTC’s consideration of the status of the three cryptocurrencies was laid out in the charges laid at KuCoin’s door last week:

KuCoin solicited and accepted orders, accepted property to margin, and operated a facility for the trading of futures, swaps, and leveraged, margined, or financed retail transactions involving digital assets that are commodities including Bitcoin (BTC), Ether (ETH), and Litecoin (LTC).

This clearly puts Ethereum and Litecoin in the same category as Bitcoin, at least as far as the CFTC is concerned, which carries significant implications for its regulatory oversight, which impacts its market legitimacy, trading infrastructure, and investor confidence. Such a classification will enhance their legitimacy in the eyes of institutional investors due to the mitigating of concerns about fraud and regulatory uncertainty.

Ethereum Status Could Undermine SEC Efforts

Bitcoin has been considered a commodity for many years, and with Litecoin being its cousin its classification as a commodity is also not a surprise. The SEC may be concerned, however, that the CFTC has now put Ethereum in the same category given that it is in the process of collecting evidence pursuant to an attempted classification as a security.

If the SEC does ever challenge the status of Ethereum in this manner, defendants will now be able to point toward the CFTC’s perspective from this filing in their defense which may prove to be invaluable.