A U.S. District Court judge called ether (ETH) a commodity in dismissing a class action lawsuit against decentralized exchange Uniswap.
In a dismissal order issued Aug. 30 by Uniswap users claiming they suffered losses from scam tokens on the exchange, Judge Katherine Polk Failla wrote that ETH and Bitcoin (BTC) are “crypto commodities.”
That distinction was part of her rationale for dismissing the case — Failla said she didn’t buy the argument that Uniswap’s token sale was subject to the Exchange Act.
Interestingly, Failla is also the judge overseeing the SEC lawsuit against Coinbase. She also has experience overseeing other cryptocurrency cases in the past, including those involving Tether and Bitfinex.
SDNY (Failla, J.) also clearly found in its August 29 decision in Risely v. Uniswap:
Ethereum is a commodity, not a security.
No analysis of the problem, just conclusions, but still pretty explicit statements if you ask me.
— Bill Hughes: wchughes.eth (@BillHughesDC) August 30, 2023
While her comments weren’t a definitive ruling on ether’s legal classification in the U.S., other judges have made decisions about the cryptocurrency, such as a July ruling that, when sold through programmatic sales on exchanges, would XRP (XRP) is classified as a security.
In recent years, two U.S. financial regulators — the Securities and Exchange Commission and the Commodity Futures Trading Commission — have battled over the jurisdiction of cryptocurrencies.
SEC Chairman Gary Gensler has claimed that “everything but bitcoin” is a security under his agency’s purview.
Meanwhile, the U.S. Commodity Futures Trading Commission (CFTC) filed a lawsuit against Binance in March, accusing it of violating the Commodity Exchange Act and treating ETH and other cryptocurrencies as commodities.
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However, U.S. lawmakers have yet to decide how to grant cryptocurrency powers to the SEC or CFTC.
Several bills aimed at providing transparency in the regulation of digital assets are slowly moving through Congress, differing in how power is distributed between the two regulators.
Some of these bills, such as the 21st Century Financial Innovation and Technology Act, seek to create a process for classifying cryptocurrencies as securities or commodities.
Others explicitly hand power to regulators One example is the Digital Commodity Exchange Act, which requires cryptocurrency spot exchanges to be registered and regulated under the U.S. Commodity Futures Trading Commission (CFTC).
Meanwhile, the Digital Asset Market Structure Act will require cryptocurrencies to undergo SEC certification to demonstrate sufficient decentralization before they can be granted commodity status.
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