JPMorgan classifies ETH as a commodity

Ethereum Capitalization

The US Securities and Exchange Commission (SEC) is considering classifying Ethereum (ETH) as a commodity or moving the cryptocurrency into a new category with less stringent regulations than securities, according to JPMorgan financial strategists. This new category would not only apply to ETH, but also to other “sufficiently decentralized” cryptocurrencies. The experts add that this category would imply more restrictions and protection measures for investors than those currently for products, but less strict than those necessary for securities.

These comments from JPMorgan strategists came after SEC officials questioned former SEC CFO William Hinman’s statements in 2018 that ETH was not a security. The documents were released as part of the ongoing legal process against Ripple by the SEC.

Some SEC employees raised concerns about the mention of ETH in the draft comments. In one of the comments it was mentioned that “the fact that tokens in a sufficiently decentralized network are no longer securities” creates “a regulatory vacuum”.

SEC Chairman Gary Gensler has stated that “all cryptocurrencies except Bitcoin” are securities. Meanwhile, former US Commodity Futures Trading Commission (CFTC) Commissioner Dan Berkovitz equated ETH to both commodities and securities.

JPMorgan strategists believe that the release of the “Hinman documents” could explain why the SEC avoids taking action against ETH, whereas this year it has focused on almost all major tokens and competitors. “The Hinman documents” will likely affect the direction of current efforts by the US Congress to regulate the crypto industry in such a way that Ethereum avoids being listed, they added.

In general, according to the strategists, the publication of the documents will benefit Ethereum. The documents “strengthen Ethereum’s case to avoid being considered a security, but this does not necessarily have direct consequences for Ripple,” according to JPMorgan.

“However, if Ripple wins the case, this will have consequences for current and future SEC regulatory decisions, as the crypto companies the regulator is taking action against will similarly argue that the agency failed to provide them with fair notice.” , concluded the strategists.

In March, CFTC Chairman Rostin Benam confirmed that he views Ethereum as a commodity. In a lawsuit against the Binance exchange, the regulator also classified Bitcoin and Litecoin as commodities.