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Ethereum Community Educates The CFTC




Yesterday, the CFTC asked for information to help it understand Ethereum. The community has been quick to respond.

On December 11, the Commodity Futures Trading Commission (CFTC) published a Request for Input (RFI) seeking comments on the "underlying technology, opportunities, risks, mechanics, use cases, and markets" associated with Ether and the Ethereum platform.

The RFI is a product of LabCFTC, a division of the CFTC launched with the goal of evolving the commission into a "21st century regulator" that keeps pace with emerging technology. Through receiving public comment, the commission hopes to gain the understanding needed to develop more insightful regulations.

In addition to questions about the basic aspects of ETH and Ethereum, the CFTC wants to know – among other things – if commercial enterprises are using the platform, how ETH is recorded for accounting purposes, what the differences and similarities between the technology powering Ethereum and Bitcoin are, and if proof of stake (PoS) has been proven to work.

The Ethereum community was quick to respond.

Several members of the Ethereum community, including the co-hosts of the Into the Ether podcast and co-founders of EthHub, Eric Conner and Anthony Sassano, compiled a list of answers to the questions posed by the CFTC. The answers were first developed on EthHub, which is an open-source information portal for the Ethereum community, and later posted on GitHub.

When answering a question related to the commercial use of Ethereum and how ETH is recorded for accounting purposes, for example, the contributors referenced the standards being set and the foundations for the commercial use of the Ethereum platform developed by the Enterprise Ethereum Alliance.

The CFTC's questions reflect a particular interest in Ethereum's transition from proof of work to proof of stake. When answering questions surrounding whether PoS has been tested – and its vulnerabilities – the group's answers highlight the benefits of Casper Proof of Stake, claiming that it solves the previous security problems associated with PoS by "enforcing a set of pre-defined conditions and rules that if violated by a malicious party will result in the 'slashing' of their staked Ether as a penalty."

The group's answers concede that more testing of PoS is currently needed and taking place, but clarify that Casper "is fundamentally different and intends to maximize decentralization by incentivizing hundreds of thousands of validators to participate in securing the network versus a small subset of voted on delegates."

The earnest answers provided by EthHub may not only help CFTC officials learn more about the workings of Ethereum, but also allow the regulatory body to begin interacting with the Ethereum community in a productive manner.

Both the CFTC and LabCFTC have already been fairly active in educating themselves and the public on the topic of cryptocurrency. In October of last year, LabCFTC issued its first primer intended to educate the public on potential uses cases for both cryptocurrency and blockchain technology. That primer predominately focused on the risks posed by virtual currencies – and the role of the CFTC in regulating their use – while a more recent November 2018 primer outlined the dangers of EDCCs (better known as smart contracts).

Those wishing to provide info to the CFTC about all things Ethereum must submit answers to questions within 60 days of the RFI's publication.

Nathan Graham

Nathan Graham lives in Sparks, Nevada, with his wife, Beth, and dog, Kyia. Nathan has a passion for new technology, grant writing, and short stories. He spends his time rafting the American River, playing video games, and writing.

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