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In order to improve the commission’s understanding of Ethereum and its underlying technology, the CFTC has announced its intention to publish a respective Request for Information (RFI) with the Federal Register.
The U.S. Commodity Futures Trading Commission (CFTC) is the authority that governs some crucial aspects of the cryptocurrency world. In order to accurately create regulations and definitions for the market, they would need to have a greater understanding of the components in it, which is exactly what the CFTC has decided to do with Ethereum.
Commodity Futures Trading Commission (CFTC) is looking for an in-depth analysis of Etherum blockchain. Official announcement which was released on December 11, 2018 states that the commission would need a better understanding of ETH and how it goes beyond Bitcoin future.
The statement reads:
“The Commodity Futures Trading Commission (CFTC) is seeking public comment and feedback in order to better inform the Commission’s understanding of the technology, mechanics, and markets for virtual currencies beyond Bitcoin, namely Ether and its use on the Ethereum Network.”
The document lists 25 different questions about ether and the network, divided into the network’s purpose, the technology behind it, its governance, markets and oversight, and cybersecurity and custody.
The questions themselves touch on various issues and concerns discussed in the space, including ethereum’s upcoming move to proof-of-stake, scalability issues, how the network is being used specifically at present and how ether deposits may be audited, among others.
A longtime holder of the number two position, Ethereum’s market cap was recently overtaken by XRP, though Ethereum still remains among the most popular blockchains for new tokens and crypto-based applications. Many enthusiasts and traders breathed a huge sigh of relief last June when the Securities and Exchange Commission (SEC) announced that it did not consider ether a security, as it had become too decentralized since its initial fruition.
Many traders concluded that exchanges would soon start offering Ether futures after William Hinman, who runs the SEC’s division of corporation finance, said six months ago that he didn’t believe the token in its current form was a security that his agency had jurisdiction over.
At the Yahoo Finance Summit Hinman said:
“Based on my understanding of the present state of ether, the Ethereum network and its decentralized structure, current offers and sales of ether are not securities transactions.”
He also hinted at the idea that altcoins, in the future, would no longer need securities regulation.
“Over time, there may be other sufficiently decentralized networks and systems where regulating the tokens or coins that function on them as securities may not be required.”
At the time, Cboe Global Markets Inc. President Chris Concannon said the announcement cleared a “key stumbling block for Ether futures.” Concannon then confirmed that SEC didn’t think ether was a security at that point in time.
“What was interesting is Mr. Hinman did talk about how they also recognize that some coins that were originally securities can transform to non-securities at a later date. I think that was the more important macro statement within the speech. We have been very supportive of the SEC’s efforts with regard to initial coin offerings. Coming from a registered exchange perspective, it’s not fair to see people raising money through these unregistered offerings and just using coins as a reason they don’t have to register. The SEC has been quite clear that you can call it a coin or you can call it a certificate, but either way it needs to register.”
In a Request for Information (RFI) that will be published in the Federal Register, the CFTC is asking for public feedback on a range of questions related to the underlying technology, opportunities, risks, mechanics, use cases, and markets, related to Ether and the Ethereum Network.
“All comments must be received within 60 days of publication in the Federal Register. The RFI also seeks to understand similarities and distinctions between Ether and Bitcoin, as well as Ether-specific opportunities, challenges, and risks.
The CFTC expects the comments and information received will benefit LabCFTC, the CFTC’s FinTech initiative, and help to inform the Commission’s understanding of these emerging technologies.”
Founded in May 2017, LabCFTC is a dedicated hub for “engagement with the fintech innovation community,” aiming to examine “new regulatory fintech developments in the marketplace,” as noted by CFTC chairman Christopher Giancarlo earlier this year.
Just for a reminder, in July this year, there was a hearing, titled “Examining the Upcoming Agenda for the CFTC,” that was convened by the House Committee on Agriculture. During the hearing, Giancarlo was asked by Congressman Austin Scott to explain the goals of LabCFTC, a dedicated hub for “engagement with the fintech innovation community” that was set up by the agency last year.
“LabCFTC is our front door into these new regulatory fintech developments in the marketplace, and it’s so important to us to be able to understand these innovations that are coming down the pike so fast,” the chairman then explained.