Will ETH Futures Be Regulated In The Near Future?

The new chairman of the US Commodity Futures Trading Commission declared that Ether is a commodity so now the question remains, will ETH futures be regulated soon? Let’s try to find out in the Ethereum news below.

Heath Tarbert declared that the ETH token of the ethereum blockchain was a commodity earlier this month. This is a very important statement that comes from the regulator of the largest derivatives markets in the world. Her statement is expected to open the door to the possibility of the regulated ether derivatives in the near future. She even said:

 “I’d say it is likely that you would see a futures contract in the next six months to a year.”

The market became very excited because this will enhance the token’s appeal to institutional investors and the derivatives enable hedging which is a very important part of portfolio management and support for long positions. The derivatives market will encourage more investment thus will boost the price of the token. However, some analysts believe that we won’t see ETH futures regulated in the near future.

ETH futures are trading on exchanges based outside of the US but the volumes are very small compared to the spot market. on BitMEX, Deribit, and Huobi, the average 24-hour volume is less than 10 percent that of bitcoin while the equivalent ratio on the spot market is about 25%.

Ethereum’s proposed algorithm change could also bring more adjustments and ether could stop being a commodity and become security. Under the proof-of-stake, the ETH holders can stake their tokens and influence the protocol’s governance so they can earn an income. This will not invalidate the ether derivatives but it will move them into the joint jurisdiction of the CFTC and the US SEC.

This also becomes very important once you compare the two securities regulators’ views towards crypto. The CFTC has praised the innovation behind cryptocurrencies but the SEC has repeatedly blocked the issuance of the ETFs based on Bitcoin saying that it’s too immature of a market. It is expected however to affect broad institutional acceptance of Ether as an investment asset which still doesn’t answer the question previously asked.