Since Ethereum moved from a proof of work (PoW) to a proof of stake (PoW) mechanism, there has been an ongoing debate on whether the digital asset is now a security or a commodity. Notable figures have shared their insight on this and how the regulatory bodies are actually classifying cryptocurrencies. The latest is Cardano founder Charles Hoskison, who shared his thoughts on a recent Twitter Space.
Regulators Are Too Vague
One problem that has persisted with regulatory bodies when it comes to cryptocurrencies is that there is no clear framework for the regulation of these digital assets. In this case, issuers of tokens and network operators cannot be sure under what framework their assets lie.
Cardano founder Charles Hoskinson lamented this lack of transparency on a recent Twitter Space hosted by Perianne Boring and Tera Goody Guillen. Hoskinson explained that there actually no way to know for sure, and he would like to “know what the standards are.”
On the issue of Ethereum being a security or not, it still came down to the lack of adequate frameworks to classify such assets. Yes, the move to a proof of stake mechanism matters in this factoring but that is as much as anyone can tell for now.
“Now, it’s a proof-of-stake system…and then, perhaps, now it is a security,” Hoskinson said. “Who knows? You know, they are not going to take an official position one way or the other.” Hoskinson who had previously blasted the regulation by enforcement position being taken by regulatory bodies expressed that needs to be “some form of guidance” from lawmakers for there to be a proper classification of digital assets such as Ethereum.
ETH recovers above $1,500 | Source: ETHUSD on TradingView.com
Is Ethereum A Security?
This question is one that still weighs heavy on the minds of investors in the space and regulatory bodies. It seems that neither the SEC nor the CFTC can agree on where Ethereum actually falls. The SEC has positioned to classify the digital asset as a security and regulate it as such. However, the CFTC seems to be in disagreement with this.
At a “Regulating Financial Innovation: The Future of Crypto and Blockchain” symposium hosted in partnership with the Rutgers Center of Corporate Law and Governance, the Wall Street Blockchain Alliance, and Lowenstein Sandler LLP, the CFCT made some surprising revelations regarding the classification of Ethereum.
CFTC Chair Rostin Behnam said that the regulatory body looks at Bitcoin and Ethereum both as commodities. However, while SEC Chair Gary Gensler is willing to accept Bitcoin’s status as a commodity, he has not been as welcoming to the idea of classifying ETH as a commodity, as well as XRP.
Since there is no resolution in sight between these two regulatory watchdogs for what is a commodity and what is not, it is unlikely that there will be any official classification presented in the near future. Gensler has also disagreed with the notion that the CFTC would be in a better position to regulate the crypto market as a whole.
Featured image from The Coin Republic, chart from TradingView.com
Follow Best Owie on Twitter for market insights, updates, and the occasional funny tweet…