As Ethereum satisfies both SEC and CFTC regulations, he argued that it could be classified either as a Security or as a Commodity.

Commissioner Dan's recent comments on the financial classification of the Ethereum Token elicited a divided response from the crypto community. According to him, ETH is both a commodity and a form of protection.

In a recent podcast hosted by Laura Shin, Dan claimed that it is permissible to designate the second-largest crypto asset, Ethereum, as falling under the jurisdiction of both the SEC and CFTC. Also a former SEC general counsel was Dan Berkovitz.

The legal status of Ethereum is a hotly debated topic among financial experts, politicians, and other parties to this day. According to reports, both the SEC (Securities and Exchange Commission) and the CFTC (Commodity Futures Trading Commission) have spent months attempting to achieve control over Ethereum and other cryptocurrencies.

According to Berkovitz, SEC and CFTC Regulations Intersect.

Meanwhile, neither of the two financial regulators has been able to provide sufficient evidence to claim or lawfully classify the token as their property. Gary Gensler, chairman of the SEC, argued at a recent oversight hearing that all cryptocurrencies besides Bitcoin should be classified as securities. He refused to elaborate on his position, however.

The opinion of Dan Berkovitz regarding the legal status of Ether has aroused many eyebrows among crypto speculators, who hold divergent viewpoints. However, Dan asserted that both securities and commodities have legal descriptions that coincide, making it difficult to distinguish between the two asset classes.

According to the former commissioner, the laws of the two agencies allowed for the classification of a particular entity as both a commodity and a security simultaneously. He explained that the problem arose as a result of the fact that commodities are not primarily physical goods, but rather anything regarded as a futures contract.

This explains why the CFTC's name contains the word "futures." In addition, Dan explained that a security, as defined by the US Financial Acts, may consist of notes or investment contracts, such as futures contracts. These definitions enable the two regulatory agencies to assert claims on future contracts.

Sullivan & Cromwell Executives Disagree With SEC

In addition, the CFTC is primarily responsible for regulating futures and commodity swaps, whereas the SEC is responsible for securities regulation. Legally, however, it is possible for the SEC to view a specific entity as a security while the CFTC views the same entity as a commodity.

Therefore, the entity would be simultaneously subject to the jurisdiction of both agencies. Collin Lloyd, an executive at Sullivan & Cromwell, commented on the SEC's unequivocal assertions that all cryptocurrencies besides Bitcoin are securities and must be registered, while he was participating in the same podcast.

He argued that no law supports classifying a string of numerals operating on blockchain technology as indigenous security. In addition, Lloyd stated that he found it odd that someone would inquire whether a cryptocurrency asset is a security.

According to him, the question that should be posed is whether a specific crypto asset is being sold in a securities transaction. According to the report, he stated that the answer's applicability would depend on the context of its use.

Intriguingly, Sullivan & Cromwell is a member of the law firm recruited by Coinbase Exchange to help it scale through its current legal dispute with the SEC. In addition, the firm is one of the institutions in control of the current FTX bankruptcy case.