ETH Futures Case: The Industry's Feedback to CFTC, Reviewed

On Feb. 17, the United States Commodity and Futures Trading Commission stopped accepting public comments regarding the Ethereum mechanism.

On Dec. 11, the CFTC announced it was seeking public comments and guidance regarding the Ethereum network.

Specifically, the agency required the feedback to better understand the cryptocurrency and its underlying technology, as well as the differences and similarities between Ethereum and Bitcoin, including the "Opportunities, challenges, and risks" associated with the altcoin.

The CFTC requested public comments on 25 different questions regarding Ethereum - namely its security and market features, as well as use cases of applications based on its network.

The agency also noted that it oversees the commodity futures markets as per the Commodity Exchange Act, meaning that the CFTC will most likely use the comments to assess the possibility of approving Ethereum futures.

The Ethereum Foundation argued that, on the Bitcoin blockchain, each account simply stores a certain amount of Bitcoin as well as "a script in an ultra-minimal programming language that determines how to verify who has the right to spend these bitcoins." Ethereum, on the other hand, supports the creation of smart contracts, the foundation argued.

The Futures Industry Association also suggested that Ethereum is generally more versatile than Bitcoin, but warned the CFTC to measure additional risks caused by this difference.

"With the Ethereum Network's architecture, risk management is potentially more complicated than for Bitcoin by orders of magnitude. Whereas Bitcoin is a payment unit on a shared and distributed ledger for transactions, Ether is a unit of work on a distributed functionality tool that offers super-computing power on the Ethereum Network, in exchange for value."

The U.S. exchange argued that financially settled futures products "Would not likely have a substantial impact on the Ethereum network." In fact, Coinbase added, it could reduce price volatility, which, in turn, could result in "Greater commercial usage."

The negative comments were provided mostly by a private individual - who put "Ethereum Fraud" under his company name, arguing that listing ETH futures would "Validate fraud," among other things - and Craig Wright.