On Wednesday, Crypto Twitter was celebrating in response to the congressional testimony of the chairman of the Commodity Futures Trading Commission (CFTC).
According to Rostin Behman, a recent ruling from the federal court has reaffirmed the status of Bitcoin and Ethereum as commodities.
The status
Gary Gensler, the chairman of the Securities and Exchange Commission (SEC), has said that Bitcoin does not fall under his agency’s purview.
However, there has been uncertainty surrounding Ethereum, the second-largest crypto token in the market. This uncertainty has persisted despite the SEC’s approval of spot Ethereum ETFs in May.
Behman said that the court had reaffirmed in its decision that in accordance with the Commodities Exchange Act (CEA), both Ethereum and Bitcoin were commodities.
He was talking about a fraud case that the CFTC had initiated against an unregistered entity in the Northern District of Illinois.
Judge Mary M. Rowland had presided over the case. According to the defendant, the CFTC’s regulatory authority does not apply to any cryptocurrency and is only for commodities.
However, the judge declared that Bitcoin and Ethereum fell under the regulatory scope of the CFTC. This was because of the similarity of the case and language with other cases within the CEA.
The decision
However, the judge’s decision and Behman’s reference do not mean that Ethereum’s status is now confirmed.
Other courts may certainly take Rowland’s decision into consideration that was made in the trial court. However, it should be noted that her decision is not binding.
It is not binding in the Northern District of Illinois or any other part of the country. This is because other courts in the same jurisdiction are not bound to follow decisions that happen at the trial court level.
While the decision is certainly a positive one and good for the industry, it is not that big. It was in 2019 when Ethereum had been called a commodity by CFTC officials.
The issues
At that time, Heath Tarbert had been the CFTC chairman and he had spoken at the All Market Summit of Yahoo Finance.
Even though the SEC has never outright mentioned Ethereum’s status as a security, it has dropped its investigation into Ethereum 2.0. This has given rise to questions.
In addition, there have also been conflicted rulings from judges where the intersection of securities laws and crypto is concerned. Judges in the same jurisdiction have given issued different rulings.
One of the most historic rulings had come from Judge Analisa Torres in the Southern District of New York.
In the SEC’s case against Ripple, the Judge said that securities laws do not apply to the sale of certain crypto tokens in secondary markets.
But, there was also a case in the same district where the judge did not agree with Torres’ ruling. This was the case between the SEC and Terraform Labs.
US District Judge Jed Rakoff had permitted the case of the SEC to proceed and had cited the Howey Test. He said that the manner of sale did not have any impact on the distinction of securities.