The CFTC+SEC Ethereum Dilemma

Picture Credit: Btcmanager

I can sense there’s probably some ambivalence regarding the decision on Monday that’s to be made regarding Ethereum being a security or not.

“What SEC+CFTC Decision Are You Talking About?”

If you’re wondering what I’m talking about with regards to Ethereum and it being deemed a security, check out this link here:

Ethereum Foundation ‘Extremely Comfortable’ ETH Is Not A Security, Co-Founder Lubin Says

Joseph Lubin, the co-founder of the Ethereum Foundation, spoke out at the Collision tech conference in New Orleans yesterday. The event takes place amid reports that federal regulators are now probing ETH to determine whether or not it should be classified as a security.

To summarize, the CFTC + SEC (two U.S. regulatory bodies) are going to meet on May 7th (tomorrow) to discuss whether Ethereum should be considered a security or not.

It’s Impossible to Know What Will Happen

There are a million arguments on both sides of the aisle, but ultimately what we think makes no difference. These are the big boys that call the shots on that and we can’t guarantee that they will be adhering to the reasons that we personally feel should be considered before making their final decisions.

We Can, However, Speculate On What Will Happen in the Event of a Yes/No

What if the SEC+CFTC Decides Ethereum Truly is a Security?

I’d imagine that a decision from these regulatory bodies of “Yes, Ethereum is a security” will definitely result in some immediate panic selling. Not sure if anyone is wedged deep enough in the U.S. government + connected with crypto for there to be any substantial level of ‘insider’ selling before any formal announcement/consensus is reached.

If there is a ‘yes’, I don’t think that Ethereum will be ‘destroyed’. Ultimately, it’s decentralized in its design. Sure, Vitalik is a clear figurehead and the way that decisions are implemented on the protocol are arguably centralized (that’s a debate for another day), but the fact remains that Ethereum, at this point, can’t be shut down.

So, if Vitalik and co. decide to wave a middle finger at the SEC+CFTC and say ‘we don’t care’, then I can’t see there being any consequence.

It’s also worth considering that Coinbase, the biggest fiat on-ramp in crypto (in my opinion, I don’t have any stats to back that), has taken every step necessary to be in regulatory compliance.

They’ve already received the SEC’s blessing to expand their business and start offering index investments. So, I would imagine that Brian Armstrong would be able to finesse a situation where they can continue to offer Eth to retail investors (i.e., via the exemption that the SEC offers to some fin. institutions looking to offer securities. See this link here: https://www.sec.gov/smallbusiness/exemptofferings)

This is an aspect of this meeting that I have not seen many people discuss, but it’s definitely a silver lining in the cloud.

What if the SEC+CFTC Decides Ethereum Truly ISN’T a Security?

If it’s a no, then Ethereum could pump. However, it may not. It’s possible that a ‘No, Ethereum is not a security’ consensus from the SEC+CFTC meeting tomorrow has already been priced into Ethereum via it’s massive run that it just went on.

Ethereum isn’t a shitcoin, so I can’t imagine a case of “sell the news” would substantially drop the price, but it’s possible. As always, ‘sell the news’ is only a temporary phenomenon and the price tends to bounce back afterward.

Potential exuberance and overall heightened sentiment that would occur as a result of that information though could send Ethereum skyrocketing up as well.

Conclusion

It’s worth paying close attention to that meeting tomorrow. There are a host of trading opportunities for smart people that I’m sure will open up in the immediate aftermath of whatever verdict these regulatory bodies reach.

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