Unchained Ex-CFTC Commissioner Berkovitz Says ‘DeFi Should Be Regulated’ – But How? - Ep. 496
May 23, 2023
Dan Berkovitz, a former CFTC commissioner and SEC general counsel, teams up with Colin Lloyd, a partner at Sullivan & Cromwell, to dive into the heated debate over Ethereum's classification as a security or commodity. They discuss the implications of potential regulatory decisions and the challenges of overseeing rapidly evolving decentralized finance (DeFi) technologies. The duo emphasizes the importance of accountability in the DeFi space and suggests that legal frameworks must adapt to keep pace with innovation and protect investors.
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Commodity vs. Security
- Securities are a type of commodity, so saying Ether is both isn't contradictory.
- The confusion arises from the colloquial meaning of "commodity" as a tangible good.
CFTC Jurisdiction
- The CFTC's jurisdiction primarily covers derivatives of commodities, like futures and swaps.
- A "commodity" under the Commodity Exchange Act is anything that can be the subject of a futures contract.
Conflicting Views on Ether
- Chair Gensler suggests everything other than Bitcoin is a security because of centralized promotion.
- Chair Benham emphasizes the CFTC's legal analysis ensures listed futures, like Ether, aren't securities.