CFTC’s chairman Heath Tarbert believes that the cryptocurrency Ether is nothing but a commodity. He expressed his opinion saying that ether was not a security or an investment token.
Putting Ether, the second-largest cryptocurrency by market capitalization according to coinmarketcap.com, under the category of commodity puts it under the jurisdiction of CFTC and the new chairman anticipates trading of ether futures in the US markets. He also clarified the views of CFTC about bitcoin in Yahoo Finance’s All Markets Summit, he said:
We’ve been very clear on bitcoin: bitcoin is a commodity. We haven’t said anything about ether—until now. It is my view as chairman of the CFTC that ether is a commodity.
The views of CFTC come way after SEC’s acknowledgement of bitcoin and ether as commodities instead of securities. The SEC Director of Corporate Finance, William Hinman, also clearly stated in a similar event last year that bitcoin and ether were not considered to be securities by the SEC. The Chairman of the SEC also stated that cryptocurrencies were considered as commodities by the commission and the definition would not be changed for any currency, be it bitcoin.
Bitcoin has also failed to qualify as a daily currency as it isn’t yet possible to make a system that makes bitcoin viable for micropayments. The variation in price would affect the market prices and the return policies would have to be comprehensive on whether if upon returning the prices changed, would the client be returned the same amount of BTCs he paid or would the equivalent amount of dollars would be calculated at the time of buying and BTCs corresponding to that price would be returned. In this regard, stablecoins seem to be a much viable option which might be considered to be better options for everyday digital currencies due to the low level of volatility. The judge of these characteristics of bitcoin and stablecoins would be the use cases presented in the future and mass adoption. With more people pouring their interest in the crypto space and trading volumes going sky high, the volatility factor might be eliminated for once to consider these “commodities” as currencies or securities. Either bitcoin and the other higher currencies would turn out to be gold or dollar. Comparing BTC and gold, Martin D. Weiss, founder of Weiss Ratings stated:
Bitcoin does indeed have some characteristics that are akin to gold’s: Limited supply, robust security, as well as emphasis on being permissionless and censorship-resistant. But the differences are equally important. Bitcoin is digital, which means it’s free to store, easy to transfer, and, unlike virtually all other financial assets, carries no counterparty risk. This makes it a unique and ideal store of value. As its market cap grows and its price becomes more stable, it’s likely to become more popular as a safe haven.
Putting all the assumptions aside, although treated as a commodity, for now, CFTC’s jurisdiction might help ether futures into US markets. These little tools combined might be the actual triggers for mass adoption, which would result in the aforementioned assumptions being true.