Former CFTC Chair Massad Also Can’t Say if ETH Is a Security

Another House subcommittee calls on Congress and other agencies to get it together on crypto policy

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Former CFTC Chair Tim Massad | Brookings Institution/"Timothy Massad" (CC license)

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The House Committee on Agriculture Subcommittee on Commodity Markets, Digital Assets and Rural Development gathered Thursday to discuss “regulatory gaps” in cryptocurrency spot market regulation. 

The conversation revolved around token classification: Are cryptocurrencies securities or commodities? Both sides of the aisle expressed interest in making the passage of a comprehensive legislative framework a priority.

Subcommittee Chair Dusty Johnson, R-S.D., kicked off the conversation by emphasizing the need for innovation; we need to ensure “the next Ethereum” is able to emerge, he said. Johnson added that bipartisan cooperation is key, and the CFTC, SEC and state banking regulators also need to be a part of the conversation around spot market policy.

Hearing witness former CFTC Chair Timothy Massad used his prepared testimony to advocate for what he called an “alternative approach” to the crypto token classification issue: Congress should direct the SEC and CFTC to “develop joint rules” to determine what constitutes both commodities and securities. 

The SEC’s current regulation-by-enforcement strategy is time consuming and inadequate; court case precedent is not enough clarity, Massad added. 

While crypto fans can certainly get behind this opinion, Massad cannot answer one burning question from the industry: Is ether a security or a commodity?

“I don’t have enough information,” Massad said in response to the question posed by Rep. Zach Nunn, R-Iowa. 

“The concern about ether…was in the Merge, where they changed the system of validating transactions, there seemed to be a foundation, a group of people involved in that…is that, under the Howey test, a common enterprise?,” Massad added. 

It’s the same query SEC Chair Gary Gensler himself could not answer last week before the House Finance Services Committee

Rep. Warren Davidson, R-Ohio, asked Gensler if ether was a security, “yes or no,” during last week’s hearing. Gensler started to answer, without a ‘yes’ or ‘no,’ and was cut off by Davidson. 

The House Agriculture Committee and the House Financial Services Committee, chaired by crypto-friendly Patrick McHenry, R-N.C., are set to hold a joint hearing on digital assets next month, Johnson said.


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