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CFTC Chair Heath Tarbert Declares That Ethereum Is a Commodity

In an interview at the Yahoo! Finance All Markets Summit, CFTC Chair Heath P. Tarbert declared that Ethereum is a commodity under the Commodity Exchange Act, and said that the agency is still considering the regulatory status of Libra. He also commented on U.S. leadership in blockchain and digital assets innovation, recent amendments to the Volcker Rule and issues related to Brexit.

Mr. Tarbert considered questions related to the Howey Test, and emphasized that:

  • Ethereum, the second-biggest cryptocurrency, is a commodity under the Commodity Exchange Act and, therefore, falls under CFTC jurisdiction; and

  • unless a "forked asset" (i.e., a cryptocurrency derived from an existing crypto-asset) raises securities law issues under the Howey Test, it should be treated the same as other digital assets.

He also stated that:

  • it is imperative that the United States remains a leader in FinTech innovation, as such leadership will allow the United States to write the market rules;

  • LabCFTC is intended to bridge the gap between Washington regulators trained in traditional commodity markets and "very different" markets in digital assets, as well as being a link to Silicon Valley;

  • LabCFTC just hired a new Director, Melissa Netram, formerly of Intuit;

  • the recent amendments to the Volcker Rule are a "recalibration" and not a "revocation," and should ease the compliance burdens on smaller community and regional banks; and

  • the CFTC spent a year "replicating" current European rule agreements and equivalence arrangements in order to be prepared for Brexit.

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