The U.S. House of Representatives Subcommittee on Agricultural Commodity Markets, Digital Assets, and Rural Development met on Thursday (April 27) to discuss the “legal loophole” regulating the spot market for cryptocurrencies.
The conversation revolved around the taxonomy of tokens: Are cryptocurrencies securities or commodities? Both parties have expressed interest in adopting a comprehensive regulatory framework as a priority.
Subcommittee chair Dusty Johnson, RS.D., started the conversation by emphasizing the need for innovation: We need to ensure that the “next Ethereum” can emerge. He added that bipartisanship is key and that the CFTC, SEC and state banking regulators also need to be part of the conversation around spot market policy.
Witness and ex-CFTC chair Timothy Massad uses his prepared testimony to advocate a ‘different approach’ to crypto token classification: Congress should instruct SEC and CFTC to ‘create general rules’ to define commodities and the composition of securities.
The SEC’s current regulatory enforcement strategy is time-consuming and inadequate. Massad added that the case precedent was not clear enough.
While cryptocurrency enthusiasts can certainly support this view, Massad was unable to answer a vexing question posed by the industry: Is ether a security or a commodity?
“I don’t have enough information,” Massad said in response to a question from Rep. Zach Nunn, R-Iowa. “The concern about ethereum… is The Merge, when the network changes the transaction verification system, there seems to be a platform, a group of people involved in it… According to the Howey test, is it ordinary business? Isn’t it?”
SEC Chairman Gary Gensler failed to answer the same question before the House Financial Services Committee last week.
Republican Sen. Warren Davidson of Ohio asked Gensler at a hearing last week whether ethereum was a security. Gensler began to answer, without “yes” or “no,” and was interrupted by Davidson.
Under the leadership of crypto-friendly Patrick McHenry, the House Agriculture Committee and the House Financial Services Committee will hold joint hearings on digital assets next month, Johnson said.
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According to BlockWorks
