On September 17, 2015, the US Commodity Futures Trading Commission (CFTC) officially declared Bitcoin a commodity, a distinction that eight years later continues to set it apart from other cryptocurrencies that have yet to obtain this status. .
While regulatory uncertainty still lingers over other highly centralized, digital assets, the CFTC’s classification of Bitcoin as a commodity establishes a regulatory framework for Bitcoin, one that allows it to be treated like any other classical commodities including gold and precious metals.
In its ruling, the CFTC stated that Section 1a(9) of the CEA defines commodities to include “all services, rights, and interests for which contracts for future delivery exist now or in the future. “
“The definition of a ‘commodity’ is broad… Bitcoin and other virtual currencies are included in the definition and are precisely defined as commodities,” the agency wrote at the time.
The US Securities and Exchange Commission (SEC), under the leadership of Chairman Gary Gensler, is actively examining various digital assets to determine whether they should be classified as securities, an ongoing evaluation that has generated a complex and evolving landscape for altcoins.
In recent remarks, Chairman Gensler reiterated the SEC’s commitment to maintaining a strong regulatory framework for cryptocurrencies. He emphasized that the difference between commodities and securities depends on the specific characteristics of each digital asset.
Gensler acknowledged that while Bitcoin, due to its decentralized nature, qualifies as a commodity, other cryptocurrencies exhibit characteristics that could classify them as securities.
The determination depends on factors such as the degree of centralization, functionality, and the presence of third-party entities. Gensler’s comments highlighted an ongoing debate within regulatory circles about how to effectively classify cryptocurrencies.
Much debated is the Howey Test, the regulatory standard set in the 1900s that seeks to establish whether a specific investment offers the promise of a financial return from the work of others.
Importantly, Bitcoin, with its use of proof-of-work as a consensus mechanism allows anyone in the world to generate electricity to buy or create a mining machine, whose calculations will enable participants to acquire new cryptocurrency that it creates.
This distinction separates Bitcoin from the obscurity surrounding other altcoins, and continues to be a major factor in Bitcoin’s legitimacy and growth in financial markets at a time when the regulatory status of other cryptocurrencies, at least in the United States, remains uncertain.
The 8th anniversary of the classification of Bitcoin as a commodity is a reminder of the progress made in this area, even though other cryptocurrencies await definitive regulatory guidance from the SEC.