Bitcoin is a commodity

crypto.inferno (67)in #bitcoin • 6 years ago

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A judge has finally made a clear decision that BTC falls under the CFTC’s remit – another little piece of regulation that could make a big difference.

You might have been forgiven for thinking this had already been decided, but the CFTC – the Commodities and Futures Trading Commission, the US agency set up to regulate futures and options markets – has just announced that bitcoin will be treated as a commodity.

Ok, so it’s not the sexiest of news, but it’s kind of a big deal to know this for sure when it comes to the all-important ‘Institutional Money’ we hear is sitting on the sidelines, waiting to pour into crypto in extravagantly large quantities.

In fact, the recent hearing bizarrely saw all digital currencies designated as commodities. The ruling took place in the context of a fraud case brought against Randall Crater by a group of investors in his project, My Big Coin. Evidently the name alone didn’t wave any red flags to his supporters, who bought it and promptly found out they’d been conned.

Crater’s defence tried to get the case dismissed on the grounds that the CFTC had no right to judge in cases involving digital currencies. The judge disagreed, stating that the case clearly fell within the CFTC’s remit, and that the law was broad enough that the same categorisation would encompass all digital currencies.

Part of the reasoning for this decision was that bitcoin already has futures. By extension, the judge argued, this made My Big Coin – and all other cryptos – commodities.

We can expect to hear more about this and there will doubtless be further legal challenges. However, it’s an important move for at least one reason. It’s a commodity, not a currency or security. This means that for now, investors will be clearer how bitcoin will be treated for tax and regulatory purposes. It’s just another little step in the right direction for institutional money and large investors to come in.

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