“Let me just basically say how impressed I am by Ethereum, full stop, period.”
No, that’s not a Silicon Valley investor. That was Heath Tarbert, chairman of the Commodity Futures Trading Commission (CFTC), who flexed a sophisticated understanding of blockchains during a live interview at CoinDesk’s invest: ethereum economy virtual conference Wednesday.
Chatting with CoinDesk Chief Content Officer Michael J. Casey, Tarbert discussed how Ethereum and decentralized finance (DeFi) fit into U.S. securities and commodity laws, as well as the agency’s recent enforcement actions and the potential benefits and risks of migrating financial activities to distributed networks.
The “fireside chat” picked up where a similar conversation last year left off: How Ethereum and its expected shift to a proof-of-stake consensus mechanism might fit into U.S. commodities laws.
“I’m not willing to say necessarily that” governance by staking would definitely put Ethereum 2.0, the coming reboot of the world’s second-largest blockchain, into a securities classification, he said. “It’s still decentralized in a way that your typical company or even a cryptocurrency that really has a company standing behind it” isn’t.
Ether (the blockchain’s native cryptocurrency) right now is considered a commodity, similar to bitcoin, the only other cryptocurrency with a regulated derivatives market in the U.S. However, it’s unclear whether a proof-of-stake network would be treated similarly under U.S. law or if it would more closely resemble a security.
“The more decentralized it becomes over time and the mo...