New York Judge classifies ETH as a commodity, adding a new dimension to the ongoing SEC debate over cryptocurrency classifications.
This week, New York Judge Katherine Failla called ETH a commodity after rejecting a class action lawsuit against the leading decentralized exchange Uniswap. Judge Failla is also in charge of the SEC’s ongoing case against Coinbase.
Judge Failla wrote, “The Court finds that the smart contracts here were themselves able to be carried out lawfully, as with the exchange of crypto commodities ETH and Bitcoin.”
The Securities and Exchange Commission has evaded questions regarding ETH’s classification since Gary Gensler took office. Gensler believes that “everything other than Bitcoin” is a security. Yet, the SEC hasn’t directly pursued ETH, suggesting they might not have a strong case to label it as a security.
The SEC uses a legal test called the Howey Test to decide whether a transaction qualifies as an investment contract, and therefore a security. According to this test, an investment contract exists if there is an “investment of money in a common enterprise with a reasonable expectation of profits to be derived from the efforts of others.”
Last month, in a case against Coinbase, the SEC ruled that Solana, Polygon, Cardano, and nine other assets are securities. Following this decision, Coinbase raised questions about the SEC’s interpretation of securities laws, implying that the agency might be overstepping its legal authority.
Ethereum’s price dropped by 2.1% in the past 24 hours, according to CoinGecko.
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