Stablecoins and Ether are ‘going to be commodities,’ reaffirms CFTC chair
Stablecoins and Ether are ‘going to be commodities,’ reaffirms CFTC chair
In the tug-of-war between the United States regulators over control of crypto assets, the Commodity Futures Trading Commission (CFTC) chair has tripled-down on his stance that Ether and stablecoins are commodities.
In remarks made Wednesday during a Fintech Week event in Washington, DC, CFTC chair Heath Tarbert reaffirmed that Ethereum, the world’s second-largest cryptocurrency by market capitalization, was a commodity under authority of his government agency.
”Ether is a commodity,” Tarbert said. “We’ve been very clear on that and we’ve invested a lot of time [into it].”
Tarbert added that the same holds true for all digital assets labeled as “stablecoins” — money pegged to government-issued currency or other crypto assets. By design, stablecoins aim to maintain a stable value and avoid price volatility.
The Growing Recognition of Crypto Assets
The CFTC’s explicit recognition of crypto assets is nothing new; the agency has previously determined that popular tokens like Bitcoin, Litecoin and XRP form a new asset class. Tarbert’s reaffirmation is reflective of a broader shift underway among U.S. regulators in terms of how they classify and classify digital asset activities.
The Securities and Exchange Commission (SEC) has largely seen access to Bitcoin and other cryptocurrencies as a securities offering. The CFTC, however, views all cryptocurrencies as commodities — an asset classification that involves a certain amount of speculation, but with less stringent oversight.
In essence, the distinction between distinguishing between a commodity versus a security is one of the many complexities related to digital assets. A commodity must have some sort of economic use or value; a security, on the other hand, is typically seen as a passive investment that doesn’t actively produce a profit.
The Pivotal Role of Stablecoins
The discussion around the classification of crypto assets has become increasingly relevant as more and more individuals and institutions adopt digital assets for a variety of use cases. For many, the dominant motivation behind such an investment is speculation, a factor that has been recognized as an integral part of the recent cryptocurrency boom.
Stablecoins, however, offer a unique opportunity for individuals and organizations to further engage in crypto asset-related activities without the fears of volatility, making them ideal for use in a variety of applications including payments, remittances and more.
Additionally, stablecoins become increasingly useful, as their value is largely independent of the price of other crypto assets or the fluctuations of fiat currencies. This makes them especially appealing to businesses, as they can be transacted quickly and securely while incurring minimal transaction costs.
In his Wednesday remarks, Tarbert noted that the rise of stablecoins has certainly caught the attention of regulators and the CFTC, which have been pushing for the adoption of “digital commodities”.
“Stablecoins are … going to become a very important part of the digital commodity landscape,” Tarbert said. “I firmly believe stablecoins and Ether are going to be commodities.”
As the crypto ecosystem continues to expand and evolve, the U.S. regulators are taking a more proactive approach to the industry, setting the stage for the adoption of stablecoins as a legitimate asset class.