U.S. District Court Judge Labels Ether and Bitcoin as “Crypto Commodities” in Dismissal of Lawsuit Against Uniswap
In a significant legal development, United States District Court Judge Katherine Polk Failla has dismissed a class-action lawsuit against decentralized exchange (DEX) Uniswap while categorizing Ethereum (ETH) and Bitcoin (BTC) as “crypto commodities.”
The lawsuit was filed by Uniswap users who alleged financial losses due to fraudulent tokens on the exchange.
Judge Failla’s dismissal order, issued on August 30, highlighted the unique nature of cryptocurrencies by referring to ETH and BTC as “crypto commodities.” This classification played a pivotal role in her decision to reject the case that Uniswap’s token sales are to be regulated under the exchange act.
However, her statement does not serve as a definitive ruling on the legal status of Ethereum and Bitcoin in the U.S. legal system.
This latest judgment diverges from recent legal actions that have treated certain cryptocurrencies differently. Notably, a July ruling by a U.S. federal judge classified XRP as a security when sold to institutional investors, but not when sold to the general public or distributed to staff members.
The disagreement between regulatory bodies adds another layer of complexity. The Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have been debating jurisdictional rights concerning cryptocurrencies.
SEC Chair Gary Gensler’s assertion that “everything other than Bitcoin” falls under the SEC’s jurisdiction as securities, which clashes with the CFTC’s claim that cryptocurrencies, including Ether, should be treated as commodities.
The uncertainty surrounding the regulatory landscape for cryptocurrencies has prompted lawmakers to introduce various bills in Congress aimed at bringing clarity to the issue.
However, these bills propose differing solutions, including categorizing cryptocurrencies as securities or commodities, and determining the regulatory authority responsible for overseeing them.
Among these bills, the Financial Innovation and Technology for the 21st Century Act suggests a process for classifying cryptocurrencies.
On the other hand, the Digital Commodity Exchange Act proposes the registration and regulation of crypto spot exchanges under the CFTC.
Meanwhile, the Digital Asset Market Structure Bill introduces the concept of SEC certification for cryptocurrencies, ensuring sufficient decentralization before granting commodity status.