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15 Oct 2019
3 min read

Crypto Endless Struggle With Regulators

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Written by OspreyFX News Team

“Ethereum is a Commodity” CFTC Heath Tarbet stated.

When talking about cryptocurrencies, bitcoin usually takes the spotlight, although altcoins cannot be ignored. This was emphasised in last week’s turn of events with some surprising statements by the president of the CFTC, specifically regarding Ethereum (ETH).

The response from the ETH/USD pair to the news was relatively silent. “We have been very clear about bitcoin: bitcoin is a product or commodity. We haven’t said anything about ether, so far,” said Heath Tarbet, current Chairman of the Commodities Futures Trading Commission in the United States. The final sentence of his statement stated, “My point of view as Director of the CFTC is that ether is a commodity”. This revived the spirits of those who believe in the technologies that surround the crypto space.

These words also open the door to the developing of ETH futures, since Tarbet himself said that he is working hand in hand with the SEC to gain a clearer orientation around cryptos. It is important to remember that the CFTC had already defined bitcoin and other cryptos as “commodities,” in 2015 to be precise, which means that it was a long time before the SEC did. Altcoins, on this occasion, were the main subjects of the CFTC Chairman’s statements.

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Tarbet also acknowledged that there is an “ambiguity in the market” in terms of other currencies. However, he also stated that this aspect does not draw away the importance of digital currencies nor their way of treating these “crypto assets” in the regulatory framework. “It is logical that similar assets should be treated similarly. If the underlying asset, the original digital asset, has not been determined to be a security and is, in fact, a product, it is very likely that the forked assets are the same,” he said.

The former president of the CFTC, Christopher Giancarlo further emphasized these statements in an interview. He stated that 2019 may be the year in which there will be an increased recognition by regulatory entities of cryptos. Giancarlo’s hypothesis is supported, among other aspects, on the assumption that Libra is encouraging regulators to reflect and bring cryptocurrencies to the discussion table. Currently being actioned so that a consensus can be reached. Participation could become more active because of the regulators in the crypto space and thus eliminate the ambiguity to which Tarbet alluded.

US Treasury Secretary claims Libra “is not up to par” with regulatory standards.

Concerns regarding the security standards of cryptocurrency persist in regulatory and governmental entities globally, although lately, we have seen a reaffirmation of this opinion in US agencies. Before, we had seen the SEC continuing to reject projects relating to the regulation of crypto in the country and more recently, the Bitcoin ETF by Bitwise that, once again, saw its request thrown in the trash.

Now it is the turn of the US Treasury Department, as its secretary, Steven Mnuchin, said in an interview with CNBC that Facebook’s cryptocurrency project, Libra, has suffered from a lack of support from multiple companies because it is considered “not up to par” when it comes to the standards against money laundering. “If they do not meet the standards of our money laundering standards and the standards we have at FinCEN, we will take action measures to enforce compliance against them”, Mnuchin said, in a tone that reflects the rejection of the concept in terms of technological evolution, which gives support to cryptocurrency development.

These statements come in the context of companies such as Visa, Mastercard, and Stripe, who all decided to leave the Libra Association, which is currently in charge of managing the projects for Libra’s development. However, it must be remembered that PayPal has not completely withdrawn its support for Libra, as they hope that in the future, they can continue talks which will favour both parties. In addition, Coinbase CEO, Brian Armstrong, lashed out at the US senators who sent a letter to the companies about withdrawing their support for Libra, considering it “un-American”. The concerns of the lawmakers involved are also the same as those of the SEC and the Treasury, as they continue insisting that a project like this could lead to criminal activity growing globally.