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Lubin: Bitcoin and Ethereum are commodities – New projects to be classified as securities

  • Ethereum co-founder Joe Lubin talks about the current state of the ecosystem and the inconvenience of applying the securities law to it.
  • Heath Tarbert talks about updating the Ethereum network.

Joe Lubin, co-creator of Ethereum, spoke about the legal classification of the cryptocurrencies ecosystem. In addition, he gave his opinion on the new regulations that exist to the ecosystem and the growth that Bitcoin and Ethereum have had.

Due to the little regulation that existed at the beginning of the industry, these two cryptocurrencies were classified as commodities. However, it is likely that the new regulatory measures will classify all the new cryptocurrencies as securities.

Ethereum and Bitcoin grew up in a non-regulated industry

In an interview published by Forkast, Lubin explained how the new regulations of the crypto space hinder the progress of new technological projects. The interview took place during Hong Kong FinTech week.

Lubin commented that regulations to cryptocurrencies have a negative impact on their development. In particular, regulations in the United States have been very strict toward new projects that involve them.

According to his statements, Lubin claims that the application of the securities law to cryptocurrencies causes them to lose a good portion of the investment they could obtain. In addition, it prevents them from fulfilling the growth process required by these projects: building a community and increasing their capital. Projects usually do this by trading their tokens, but in doing so they must face regulations:

The problem is the regulatory peace, in order to grow, keep growing a community, you generally have to promise that the token that you’re selling them will appreciate. Usually by the action of the developers or promoters of the system, by definition that’s a security.

In comparison, Ethereum and Bitcoin have an immense advantage. According to Lubin, the fact that these two cryptocurrencies flourished in a non-regulated ecosystem allowed them to have their current growth. Its classification as commodities allowed them a flexibility that new projects probably won’t have.

Despite the strength and development that projects like NEO or Tezos may have, the new regulations are strict and impose a barrier that will impede them, according to Lubin, to reach the growth level of Bitcoin and Ethereum:

And so securities law is then implicated and now you can’t sell a utility token as it’s not a utility token, it’s a tokenized security. You can’t sell it broadly and equitably.

Ethereum 2.0 and the potential risks of the update

As CNF reported, some time ago, CFTC President Heath Tarbert confirmed that Ethereum should be considered a commoditiy. This apparent decision was made after Bitcoin received the same classification.

However, Tarbert also warned that this could change when the new Ethereum update was implemented. This event will take place on December 5 of this year.

Tarbert has been one of the advocates of greater US flexibility towards cryptocurrencies. Otherwise, the CFTC president fears that they could lose leadership in this area to other governments. Like that of China which is rapidly moving towards the launch of its digital coin, the digital Yuan.

Ethereum price, at the time of publication, is $182 USD and has moved sideways (-0.49%) in the last 24 hours.

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About Author

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Reynaldo Marquez has closely followed the growth of Bitcoin and blockchain technology since 2016. He has since worked as a columnist on crypto coins covering advances, falls and rises in the market, bifurcations and developments. He believes that crypto coins and blockchain technology will have a great positive impact on people's lives.

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