"Ethereum is like the internet" - CFTC chairman

In a recent interview given to Coindesk, Commodity Futures Trading Commission (CFTC) chairman Heath Tarbert expressed his gratification for Ethereum. He said,  “Let me just basically say how impressed I am by Ethereum, full stop, period.” He further explained by a comparison if Bitcoin is e-mail which is revolutionary, Ethereum goes far beyond that. It is more like the internet. Vitalik Buterin, Co- founder of Ethereum spent no time in thanking Tarbert and wrote on twitter, "Thank you for your kind support".

Tarbert also spoke about Ethereum securities and decentralized finance (DeFi) under U.S commodities law. He said that more decentralized it becomes over time and the more that it effectively runs itself, the more likely it is it’s going to fall within the commodity category and not the securities [group].

"If SEC says it is a commodity, we can say it a commodity"

Trust remains a problem with the crypto world. Ambiguities surround the legal status of the world’s second most popular cryptocurrency. CTFC classified it as a commodity like gold and thus subjects to its regulation. Crypto market has observed heightened volatility with some sizable losses as regulators impose rigid regulations on the respective exchanges. Debates erupted whether Ether should be declared as a commodity or a security. Upon this, Tarbert said that the issue is contingent on what the U.S. Securities and Exchange Commission (SEC) has to say about it. CFTC usually defer to the SEC's views on defining security, "we're generally confident we can If the SEC says 'this is not a security', then we can come in at that point and say it’s a commodity," Tarbert said. SEC governs the U.S. securities markets whereas the CFTC regulates the U.S. commodities markets. The two agencies are separated by legislation and have separate governing commissions, powers, and approaches to their respective markets.

DeFi is number one, it's revolutionary

Tarbert not only expressed his views on Ethereum but also talked about DeFi.  He said, "The whole idea of DeFi really is, number one, it’s obviously revolutionary, and I think at the end of the day could lead to a massive disintermediation of the financial system and the traditional players." He further added that ultimately it could potentially even reduce systemic risk in some ways because we don’t have the finance system concentrated in these large globally, systemically important institutions. DeFi projects is mostly powered by the Ethereum network and facilitate to lend funds at high interest.

Tarbert was also asked about Uniswap’s airdropped UNI governance token on which he said that it has some features of security but also “significant differences”, not least of which is the fact the assets were distributed for free.

Uniswap’s UNI tokens stirred the DeFi world with over 13,000 crypto enthusiasts claiming their token within three hours of its launch. After the airdropping of UNI some US law commentators believed that UNI tokens were beyond security concerns and asked SEC to hold them to account. “If people didn’t necessarily pay for it … then it’s hard to see at what point there would be an economic loss,” Tarbert said. The CFTC chairman said this would be something for the SEC to consider. If regulators aren’t bringing actions against potential violators of securities laws, private individuals can still bring their own lawsuits, at which point a court would have to decide.

Breaking silence on BitMEX

Tarbert was questioned regarding the recent criminal charges imposed against four executives of BitMEX trading platform including its founder Artur Hayes. The charges were filed by the US Department of Justice for violating the Bank Secrecy Act. The Commodity Futures Trading Commission also filed a civil enforcement action against BitMEX and three of its executives for violating Anti-Money Laundering regulations. “I want the U.S. to lead in digital assets,” Tarbert said, explaining why the agency pursued BitMEX.

“What we want, our desire is to create an environment where innovators in digital asset exchanges can grow up here in the United States, they can come to places like the CFTC and get a license and they can benefit from our regulatory regime. What we don’t want to see are offshore exchanges that are effectively flouting U.S. laws.”

BitMEX has reportedly been under the radar of CFTC since 2019.