CFTC invites comments about Ether technology, markets and risks

Maria Nikolova

The consultation seeks to help the CFTC understand Ether-specific opportunities, challenges, and risks.

The United States Commodity Futures Trading Commission (CFTC) welcomes public feedback on its Request for Input (RFI) about the technology, mechanics, and markets for Ether and its use on the Ethereum Network.

The RFI aims to help the CFTC to understand similarities and distinctions between certain virtual currencies, including here Ether and Bitcoin, as well as Ether-specific opportunities, challenges, and risks. The Commission welcomes all public comments on these and related issues.

The list of questions includes ones about regulation too. For instance, respondents are asked to elaborate on any impediments or risks associated with the reliable conversion of Ether to legal tender. The public is also asked whether there are any types of trader or intermediary conduct that has occurred in the international Ether derivative markets that raise market risks or challenges and should be monitored closely by trading venues or regulators.

The information provided through this consultation is set to help the CFTC refine its understanding of the virtual currency segment and to better inform the work of the regulator, including the evaluation of potential derivatives contracts. More broadly, the input from this request is set to assist the CFTC in identifying FinTech trends and related opportunities, challenges, and risks.

Comments must be received not later than 60 days after the date of publication of the RFI in the Federal Register.

Let’s recall that, recent Court rulings have supported the CFTC’s stance that virtual currencies are commodities and that, hence, the CFTC has the right to go after cryptocurrency fraud. One such landmark ruling was delivered by Judge Jack B. Weinstein of the New York Eastern District Court in March this year. The Judge agreed with the Commodity Futures Trading Commission (CFTC) and Chicago Mercantile Exchange Inc that virtual currencies are commodities under the Commodity Exchange Act (CEA).

In a Memorandum & Order, the Judge agreed that virtual currencies should be treated as commodities and that CFTC has standing to exercise its enforcement power over fraud related to virtual currencies sold in interstate commerce.

The Order was a part of a fraud case brought by the regulator against Patrick K. McDonnell, of Staten Island, New York, and CabbageTech, Corp. d/b/a Coin Drop Markets (CDM), a New York corporation. The defendants were charged with fraud and misappropriation in connection with purchases and trading of Bitcoin and Litecoin.

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