CFTC is unclear whether Ripple is a security or a commodity

In an interview with the News outlet Cheddar, the Commodity Futures Trading Commission (CFTC) Chairman Heath Tarbert has said that it is not clear whether XRP is a security or a commodity.

The CFTC chairman is working closely with the SEC to really think about “which falls in what box”, adding:

Part of the issue is that we share the jurisdiction with the SEC. If it’s a security, it falls under their jurisdiction. If it’s a commodity, it falls under ours.

Why regulate cryptocurrencies:

When asked about why several elements of CFTC’s policy agenda in 2020 involve cryptocurrency regulation, the Chairman replied that by regulating digital assets, “we are actually creating a market for digital assets”.

Right now Bitcoin and Ethereum are considered by CFTC as commodities and therefore fall under their jurisdiction. By allowing digital assets to come over the CFTC jurisdiction, CFTC is allowing the futures market to develop based on these assets.

Future markets have been around 100 years which have price discovery, hedging, and better risk management. In that way when investors (or traders) are interested in purchasing a particular digital asset, they can rely on the futures market. Therefore, in many ways, it could help legitimize and add liquidity to digital asset markets.