ETH Declared Commodity by CTFC, Futures Possible

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ETH has been officially labelled a commodity by the Commodity Futures Trading Commission (CFTC) yesterday in an announcement that might usher in futures trading on the popular token. CFTC Chairman Heath Tarbert, speaking to Yahoo Finance, confirmed the token’s status as a commodity, also stating that he suspected ETH futures would follow next year.

ETH a Commodity and Not a Security

Tarbet, who took the chairmanship in July, was handed the ETH question as he took office, following the commission’s public request for feedback on the issue in December last year. Ten months later and Tarbet chose Yahoo Finance’s All Markets Summit in New York City to formally announce that, “It is my view as chairman of the CFTC that ether is a commodity.” Tarbet also commented on the constant question of whether ETH, and to a lesser extent BTC, are securities, stating that he agreed with the Securities and Exchange Commission’s previous guidance that the pair should not be considered such – ETH was cleared of being a potential security in June 2018, while BTC was officially given the all clear just last week. The CTFC first commented on digital currencies back in 2015 when, as part of a separate case, it viewed “Bitcoin and other virtual currencies” as commodities, but yesterday’s confirmation is the first comment specifically on ETH.

Forks Should Be Treated the Same as the Original

Tarbet also commented on forked tokens, stating that the resultant token should be treated by regulators the same way as the original given that the fundamentals apply to both coins equally:

It stands to reason that similarly assets should be treated similarly. If the underlying asset, the original digital asset, hasn’t been determined to be a security and is therefore a commodity, most likely the forked asset will be the same, unless the fork itself raises some securities law issues under that classic Howey Test.

Tarbet was also asked if the Howey Test, which has been in place since 1946, still applied to new assets such as cryptocurrencies, replying that “the analysis [applied through the Howey Test] is pretty sound” and that “it has stood the test of time”. He also commented on how the CTFC sees ICOs, to which he responded with an answer that will be of interest to anyone associated with XRP which has been rapidly trying to decentralize itself during its current legal proceedings:

You can have a situation where something in an initial coin offering is a security initially, but over time, it gets more decentralized, and there’s a tangible value there, so you can have things that change back and forth.