District Judge Katherine Polk Failla is overseeing the Securities and Exchange Commission’s case against Coinbase. She has made a recent ruling on a class-action lawsuit involving Uniswap, a decentralized exchange.
In her dismissal order on August 30, Judge Failla categorized Ether (ETH) and Bitcoin (BTC) as commodities. This was in relation to claims by Uniswap users who had suffered losses due to fraudulent tokens on the platform.
Failla’s designation of ETH and BTC as “crypto commodities” was central to her decision to dismiss the case. She found the arguments unconvincing that Uniswap’s token sales should be regulated under the Exchange Act.
Uniswap Lawsuit Dismissal Amid Shifting Cryptocurrency Views and Regulatory Debates
Notably, Judge Failla has handled other cryptocurrency cases, such as those involving Tether and Bitfinex. Her recent comment about Ether isn’t a definite legal classification in the US, but it comes amid changing views on cryptocurrencies. For example, a July ruling categorized XRP as a security when dealing with institutional investors.
Lately, the SEC and the CFTC, two US financial regulatory bodies, have debated their jurisdictions regarding cryptocurrencies. Gary Gensler, SEC’s Chair, stated that assets apart from Bitcoin are often seen as securities under the SEC.
On the other hand, the CFTC views assets like ETH as commodities. This contrast was evident in a lawsuit against Binance in March. The lawsuit accused Binance of breaking the Commodities Exchange Act.
Congressional Initiatives for Regulatory Clarity in the U.S. Cryptocurrency Landscape
The issue of which regulatory agency holds sway over cryptocurrencies remains unresolved in U.S. legislation. Various bills in Congress aim to provide regulatory clarity for digital assets, differing in how they allocate authority between the SEC and CFTC.
For instance, the Financial Innovation and Technology for the 21st Century Act suggests a framework for classifying cryptocurrencies as securities or commodities. On the other hand, the Digital Commodity Exchange Act supports CFTC’s registration and regulation of crypto spot exchanges.
Additionally, the Digital Asset Market Structure Bill proposes that cryptocurrencies need SEC certification of their decentralization to be categorized as commodities.
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