The CFTC Offers Clarity on Telegram’s Legal Tussle with the SEC
Another regulatory agency in the U.S. has intervened on Telegram’s ongoing legal tussle with the Securities Exchange Commission.
On February 18, the Commodity Futures Trading Commission (CFTC) filed a letter with the New York Southern District Court after the court’s request. The letter expressed the CFTC’s perspectives on the complex case that involves Telegram’s digital currency Gram.
The letter states that the CFTC considers a digital currency as a commodity. The letter stands for the perspective of the division, and not necessarily of the CFTC itself or of any individual Commissioner.
The CFTC notes that Telegram says Grams should be considered a commodity and not a security; hence, it is not subject to registration under the Securities Act of 1933.
However, the CFTC likewise notes that despite its consideration of digital assets as a commodity, the provisions of the Commodity Exchange Act state that several securities are commodities and security laws are applicable to them. The agency’s conclusion is as follows:
“Thus, any given digital asset may or may not be subject to the securities laws, but that does not depend on whether the asset is a commodity. It depends on whether the asset is a ‘security’ within the meaning of the ’33 Act itself.”
This means that the CFTC did not make an explicit conclusion concerning Telegram’s Gram tokens. The agency does not have a perspective on the question.
A critical hearing in the SEC vs. Telegram case was scheduled for February 19. Reuters reported that the United States District Judge Kevin Castel of Manhattan will hear the case’s competing motions for summary judgment.
Reports have it that the ongoing legal battle between the SEC and Telegram is majorly about whether a token sale stands for an investment contract. The battle began when the SEC filed the action against Telegram in October last year.
Telegram’s argument remains that Grams is not an investment product while the SEC maintains that Grams is a security and is subject to securities laws.
Featured image courtesy of Shutterstock. Source: Cryptopress.