Ethereum Co-founder Joseph Lubin Says Eth Is a Commodity

In an interview, Ethereum co-founder and Consensys CEO Joseph Lubin argued that ETH is a commodity, even if Gensler may not admit it. The regulatory landscape in the United States mainly tries to redeem cryptocurrencies and tokens into security; the Securities and Exchange Commission chair, Gary Gensler, once needed to specify the ETH classification during a screening. 

Ethereum is a Commodity, says Joe Lubin

The recently released Hinman documents, which is a 2018 speech given by former SEC commissioner Bill Hinman, has garnered a lot of attention. People working in the agency argued that this could create confusion that the SEC has agreed on classifying ETH as non-security.

Moreover, Lubin feels that when Ethereum transitioned from energy intensive proof-of-work (PoW) consensus to Proof-of-Stake (PoS) is crossed the border of being called a security. The Canadian-Amarican entrepreneur, contributed heavily towards development of the second most powerful blockchain ecosystem. He is also the founder of a Brooklyn-based software production studio, ConsenSys. 

The main factor slowing regulatory authorities from bringing a comprehensive regulatory framework is the classification of digital assets. The tussle between the Commodities and Futures Trading Commission (CFTC) and the SEC is far from over. If they are classified as commodities, they come under CFTC; if they are securities, they’ll be governed by the SEC. 

The upcoming two digital assets legislation would provide significant power to the CFTC. Slated to be voted on in early July 2023, it would place CFTC ahead of the financial watchdog SEC in the race to instil crypto regulations. 

Per the Howey test used to classify assets as securities, a security is any financial instrument associated with a kind of investment contract. On the other hand, a commodity is an essential or natural good, for instance, gold, wheat, etc. Lubin argued that the CFTC often asserted that the agency considers Ether as a commodity. 

CFTC chairman Rostin Benham also argues that some of the cryptocurrencies are securities. He also thinks that the top three digital assets, including Bitcoin (BTC), Ether, and Tether, fall under the jurisdiction of the CFTC. 

During his tenure as an MIT professor, SEC chair Gary Gensler lectured on classifying cryptocurrencies into securities and commodities. However, the regulatory crackdown on the crypto industry by the agency over the past few years, with an aim of declaring every other cryptocurrency as a security is contradictory to his statements as a professor.

Berenberg argued in a June 21, 2023 report that after attacking digital assets and crypto exchanges for unregistered securities, their next target could be stablecoins and decentralized finance (DeFi). Stablecoins act as the backbone of the entire DeFi system. Hence a blow at the right point could hamper the whole ecosystem. 

Members of Congress, including Cynthia Lummis and Kristen Gillibrand, are trying to clear the air surrounding the classification of cryptocurrencies. They are drafting legislation helping the cause and echoing CFTC’s belief that Ether and Bitcoin are commodities.

The Hinman documents were unsealed on June 13, 2023, and they revealed that the financial watchdog of the United States might need to be a better agency to police the crypto industry. During a 2018 speech, he argued that Ether should not be classified as securities. 

The regulatory action by the SEC against the crypto industry increased by 183% after the infamous FTX collapse. In their defence, the regulators are trying to safeguard the citizens from investing in an unregistered financial instrument, but their modus operandi is not welcomed by the crypto community.

Nancy J. Allen
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Source: https://www.thecoinrepublic.com/2023/06/29/ethereum-co-founder-joseph-lubin-says-eth-is-a-commodity/