As a seasoned analyst with over two decades of experience in the financial industry, I’ve seen my fair share of regulatory battles and market evolutions. The recent settlement between eToro and the SEC sheds some light on the ever-changing landscape of cryptocurrencies, particularly Ether.
Trading app eToro recently reached a settlement with the US Securities and Exchange Commission.
On Thursday, the Securities and Exchange Commission (SEC) revealed that eToro has agreed to pay a fine of $1.5 million to resolve allegations that it was running an unregistered broker and clearing agency in relation to its trading platform, which enabled transactions involving specific cryptocurrencies deemed as securities.
But eToro also agreed to halt trading for any cryptos except for Bitcoin, Bitcoin Cash, and Ether.
Gurbir S. Grewal, Director of the SEC’s Enforcement Division, stated that eToro decided to adhere to regulations by eliminating tokens deemed as investment contracts from its platform and operate within our existing legal framework.
As a researcher delving into the realm of cryptocurrencies, I find that the recent settlement offers valuable insights into the Securities and Exchange Commission’s (SEC) perspective on digital currencies. This development seems to further solidify the viewpoint that Ether should be categorized as a commodity instead of a security – a crucial point in the regulatory discussion regarding cryptocurrencies in the United States.
The Securities and Exchange Commission (SEC), responsible for overseeing a significant portion of trading activities on Wall Street, has adopted diverse perspectives regarding various cryptocurrencies. Similarly, the Commodity Futures Trading Commission (CFTC) considers cryptocurrencies as potential securities or commodities.
So what is Ether then, if not a security?
The ‘ETH is Property’ Argument
As per the U.S. tax regulations set by the Internal Revenue Service (IRS), Ether and many other cryptographically secured digital assets are considered as properties and hence taxed accordingly.
According to the Internal Revenue Service (IRS) tax system and as Coinbase contends in its dispute with the Securities and Exchange Commission (SEC), Ether, like other cryptocurrencies, is considered a form of personal property – much like collectible items such as baseball cards.
The ‘ETH is Capital, Sort of’ Argument
An alternative perspective on Ether, which doesn’t contradict its characterization as a commodity or property, is viewing it as a software-based form of expression, but one that performs a uniquely groundbreaking function within the annals of Internet history.
On the Ethereum network, a smart contract – which operates independently and can be customized with programming – exists. This network is decentralized and functions peer-to-peer in a self-governing manner.
While an Ethereum platform isn’t identical to a traditional legal contract, it can accommodate smart contracts that are enforceable by law. This is one of its primary applications.
Instead, Ether functions as a tool constructed from numerical and textual components, which your household or workplace can utilize for completing tasks. While it operates digitally, it shares similarities with traditional tools like a fax machine, telephone, or rolodex. Ethereum serves as a form of capital that enhances the productive potential of its users.
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2024-09-15 22:18