One of the biggest debates in the crypto community was to agree on the classification of Bitcoin and cryptocurrencies in general. From the very beginning, there has been endless debates over whether Bitcoin was a commodity or a security. The problem has always been the fact that the market for digital coins and tokens is still very young and there is no widely-accepted standard for placing a value on a particular coin or token. Fortunately, the debate ended with an official announcement from the CFTC.
On October 3rd 2018, the U.S court has ruled in favour of the Commodity Futures Trading Commission (CFTC) in a case involving now-defunct cryptocurrency My Big Coin. By extension, this ruling cemented the nature of Bitcoin as a commodity. Matter of fact, this is not the first time a judge has ruled a cryptocurrency to be a commodity. Since 2015, with multiple U.S rulings, there has been a growing common consensus on the classification of bitcoin as a commodity.
Let’s start by defining what a commodity is.
According to Investopedia :
“A commodity is a basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often used as inputs in the production of other goods or services. The quality of a given commodity may differ slightly, but it is essentially uniform across producers. When they are traded on an exchange, commodities must also meet specified minimum standards, also known as a basis grade. ”
What does all of this mean?
In theory, as a commodity, this means that Bitcoin can be treated like oil or gold and have ETF’s built around the product itself. This is a way for the CFTC to claim Bitcoin under its umbrella after understanding the huge potential the technology has. It is an important decision because it could open the door for the institutional investors that the crypto world has been waiting for quite some time.
The regulation of cryptocurrency is still in its infancy, but very soon, we could see important players entering the market. The involvement of the CFTC in the world of cryptocurrency suggests that they are ready to fight to create a secure and stable environment for investors.
This is definitely a step in the right direction and, once again, confirming that cryptocurrencies are here to stay.