The IRS thinks bitcoin is property; a federal judge thinks it’s a currency; now the Commodity Futures Trading Commission has decreed it a commodity.
What is bitcoin? Is it property, something to be owned? Is it a currency, something to be spent? Or is it a commodity, defined by Webster’s Dictionary as “any useful thing,” and/or “anything bought and sold; any article of commerce.”
The Internal Revenue Service thinks bitcoin is property; a federal judge thinks it’s a currency; now the Commodity Futures Trading Commission (CFTC) has decreed it a commodity. That means the regulator can now bring charges against any wrongdoers trading cryptocurrency futures and options.
In a statement, the CTFC’s Director of Enforcement, Aitan Goelman, said:
“While there is a lot of excitement surrounding Bitcoin and other virtual currencies, innovation does not excuse those acting in this space from following the same rules applicable to all participants in the commodity derivatives markets.”
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Does the ruling change the fundamental nature of what bitcoin is? We asked members of the bitcoin community for their views.
The developer: “A bizarre ruling that will be challenged”
“There are so many regulators in the U.S., and they all want more jurisdiction, which leads to a constant stream of bizarre rulings.
“I’m not terribly surprised and not terribly worried. I think the CFTC has a very weak case here and it’s a very creative reinterpretation of what the word commodity means. The ruling will be challenged and judges will apply common sense and decide it to be a currency” as happened in the Silk Road case.
The researcher: “Don’t take it out of context”
“This ruling is obviously very consequential to U.S.-based bitcoin futures trading platforms, but it’s important not to overplay the implications. Last year, the U.K. tax authority ruled that Bitcoin is a currency. Last month a Japanese judge ruled that bitcoin is not property. These rulings concerning what bitcoin is or is not are for certain purposes only, but they often get taken out of context.”
The exchange founder: “It will send companies offshore”
“In the U.S. there are regulators that look at Bitcoin from their own perspective and just arbitrarily make up a rule or guidance. New York regulates it as a currency, for example. It’s just not sensible. If this ruling does affect anyone, they’ll just move to offshore jurisdictions.
“Bitcoin has many uses — sometimes it’s used, traded as a commodity, but it’s also used as a currency and a technology.”
The CEO: “Regulators need to work together”
“Regulators need to be talking with each other and engaging with industry. The CFTC doesn’t seem to have done either of those. Just claiming a platform is illegally offering bitcoin options isn’t helpful if they’re trying to have a relationship with these companies.
“There’s a lot more collaboration in the U.K. between the Treasury, the FCA, HMRC and the top bitcoin companies. To date the government hasn’t taken a public position that they’ve had to take back.
“Having said that I’d rather bitcoin were regulated as a commodity because commodity regulations are the lightest.”
The Lecturer: “A very prudent move”
“As money, bitcoin is terrible — a deeply deflationary currency that’s within a bubble. It’s an OK commodity, but it’s the equivalent of selling real estate on the moon.
“There’s no inherent value. I applaud the ability of speculators to make money from selling it to other people, but I don’t think even calling it a commodity is enough. It’s a kind of shadow asset.
“Moving toward a system where proponents of bitcoin could use a less stark designation for marketing purposes would have been a mistake.
“So it’s very prudent to classify bitcoin as something relatively uncontentious, simply something bought and sold for a price, rather than something contentious, like a currency or other financial asset.”