Another U.s. regulatory agency has weighed in on Telegram's ongoing legal battle with the Securities Substitution Commission.

Post-obit a request past the New York Southern Commune Court, a partition at the Commodity Futures Trading Commission (CFTC) has filed a letter with the court on Feb. 18, expressing its views on the complicated case involving Telegram's digital currency Gram.

CFTC says digital currency is a commodity

According to the letter, the CFTC's opinion on the case is "relatively straightforward" and stipulates that a "digital currency is a article." Submitted by the CFTC's Function of General Counsel, the letter represents the views of the partition, and non not necessarily of the CFTC itself or of whatever individual Commissioner.

In the document, the CFTC states that Telegram itself argues that Grams should be a considered a commodity instead of a security:

"We sympathise that the defendant, Telegram Grouping, Inc., argues that its planned digital currency, the 'Gram,' will be a commodity and non a security, and therefore not subject to registration nether the Securities Deed of 1933 ("'33 Act")."

However, the CFTC also states that, while it considers digital avails to exist a commodity, the Commodity Exchange Human activity provides that many securities are bolt to which security laws apply, terminal:

"Thus, any given digital asset may or may not be subject to the securities laws, merely that does not depend on whether the asset is a commodity. Information technology depends on whether the asset is a 'security' within the meaning of the '33 Act itself."

Every bit such, the agency has preferred to avert making an explicit determination regarding Telegram'south Gram tokens, noting that CFTC has "no view" on the question.

The CFTC's comments came just a mean solar day before an important hearing in the SEC vs Telegram case. On Feb. xix, U.S. Commune Judge Kevin Castel of Manhattan volition hear competing motions for summary judgment in the case, every bit reported past Reuters.

As reported, the question of whether a token sale constitutes an investment contract — and therefore a securities offering — has been the core of the ongoing battle between the SEC and Telegram, which started when the agency filed the activeness against Telegram in October 2022. While Telegram has been arguing that Grams do not constitute an investment product, the SEC has kept insisting that Telegram's digital currency is a security and is subject to securities laws.

The court example could become even more dislocated should a recent token safe harbor proposal by the SEC Commissioner Hester Peirce come into fruition. According to the Feb. vi proposal, decentralized projects would exist granted with a 3-year grace period to build a network without fearing SEC legal action.