Ethereum: A commodity or a security;it’s implication to crypto market.
Ethereum is one of the leading token after bitcoin.The second most held token after bitcoin.
Recently there has been issues over ethereum being a commodity or a security. But then, what is a commodity and what is a security. A security is a fungible,negotiable financial instrument that holds some type of monetary value. A security can be used to raise capital in a public and private markets. On the other hand, a crypto commodity is a tradable or fungible asset that may represent a commodity utility or contract in the real or virtual world through exclusive tokens on a blockchain network.
Anyways,a New York court classified popular cryptocurrencies ether(ETH) and bitcoin (BTC) as commodities while dismissing a proposed class action law suit against leading decentralized crypto exchange Uniswap. The judge, who also oversees the SEC lawsuit against Coinbase, classified ether(ETH) as a commodity in here opinion on the ruling.
I hold the same view as the former US official Dan Berkowitz. Berkowitz opines that ETH can be a security and a commodity at the same time. He believes that Ethereum falls under the jurisdiction of the SEC and the CFTC. According to Berkowitz,the misunderstanding with the definition arises from the fact that goods are not exclusively material objects. However, anything that falls under scope of a “future contract” can actually be categorized as a commodity.
The former CFTC commissioner also pointed out that formally the security included bills and investment contracts, falling under the justification of the US Futures Trading commission. This is rather strange question: “is this digital asset a security or not ?”. I think you should be asking, “is it being sold as part of a securities deal ? “ It depends on the facts and circumstances says Berkowitz.
IMPLICATION TO THE CRYPTO MARKET
If we say ethereum is a commodity just as the New York has ruled, then ethereum will not be subjected to control, rules and regulations of security exchange.
In this same vein, if ethereum becomes a security, it will have to adhere to the rules and regulations of the SEC.