The CFTC Take A Stance Amid SEC’s Legal Tussle with Telegram
The Commodity Futures Trading Commission(CFTC) gave their opinion on the ongoing legal battle between telegram and Security Exchange Commision.
On February 18, CFTC filed a letter after a New York Southern District Court Judge requested their opinion on the tussle at hand. The dispute is based on the functionality of Telegram’s digital currency, Gram.
The letter states that the digital currency should be regarded as a commodity and not a security. Despite the letter getting released by the office of General Counsel in CFTC, it is said the opinion is solely from the division and is not from CFTC as a whole.
The opinion does back the claim that Gram should not be security that requires registration under the Securities Act of 1933.
The agency 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 gives meaning to CFTC not making an explicit conclusion concerning Telegram’s Gram tokens. The agency seemingly does not have a clear view of 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 went to court to challenge Gram’s position in the market 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.