CFTC Chairman Says Ethereum 2.0 Tokens Could Be Treated As Securities
Over the last two years, Ethereum developers have been working really hard over the last few years to upgrade the Ethereum blockchain network. The Ethereum 2.0 network based on Proof-of-Stake consensus model is likely to launch in January 2020.
However, the U.S. Commodity Futures Trading Commission chairman - Heath Tarbett - has recently issued a warning that all the staked tokens in the Ethereum 2.0 can be potentially classified as securities.
For the existing Ethereum tokens based on the PoW consensus mechanism, the CFTC had clarified that the Ethereum tokens won’t be considered as securities. However, with the change in consensus model the CFTC might consider bringing them under their purview. He also said: “I think America needs to lead [in crypto regulation]. As a regulator, I want to, at least, create an environment where innovation can flourish.”
The CFTC chairman further spoke about an principles-based approach to enhance innovation. He added: “Rather than detailed, granular rules, we have broad-based principles that everyone can agree upon. But we will leave it up to people in the industry to how best to meet those principles.”
Note that this is a contradictory approach to concept of utility tokens offered by the U.S. Securities and Exchange Commission (SEC) in its Howey’s Test.
The CFTC jurisdiction currently precedes over the derivatives, commodities, or any other financial contracts derived from the underlying commodities.
Ethereum’s complete shift to PoS consensus model can probably put it in danger with the Ethereum 2.0 tokens classified as securities.
It will be interesting to see the upcoming developments in Ethereum 2.0 roadmap and how the developers would be able to overcome this issue.