Cryptocurrencies as Commodity: What It Means for the Future

On April 26th, Brian Armstrong, CEO of Coinbase, forwarded encrypted KOL @ ZK_ Shark tweet, featuring a speech by Gary Gensler, the current chairman of the US Securities and Exchange Commission, during the 2018 Massachusetts Institute of Technology autumn graduate class. Gary Gensler stated at the time that in the United States and many other jurisdictions, three-quarters of cryptocurrencies are not securities, they are just a commodity, a type of cryptocurrency (cash crypto).

Cryptographic KOL “Archaeology”: Gary Gensler, Chairman of the US SEC, once stated that 3-4 cryptocurrencies are not securities

Cryptocurrencies have been a hot topic in the financial world for quite some time now. The rise of digital currencies has brought about many discussions on how they should be regulated and the impact they will have on the global economy. Recently, there has been a lot of talk about cryptocurrencies being treated as a commodity rather than a security. In this article, we will explore what this means for the future of cryptocurrencies and how it will affect investors.

What Is a Commodity?

Before we delve into cryptocurrencies being considered as commodities, it’s important to understand what a commodity is. According to Investopedia, a commodity is a basic good or raw material that is used to create other goods or services. Examples of commodities include gold, silver, oil, and wheat. These goods are traded on commodity exchanges, with the prices being determined by the forces of supply and demand.

Cryptocurrencies as Commodity

On April 26th, Brian Armstrong, CEO of Coinbase, forwarded an encrypted tweet by KOL @ ZK_Shark featuring a speech by Gary Gensler, the current chairman of the US Securities and Exchange Commission (SEC). In the speech, which was given in 2018 at the Massachusetts Institute of Technology, Gensler stated that in the United States and many other jurisdictions, three-quarters of cryptocurrencies are not securities, but a type of cryptocurrency or “cash crypto.” Gensler’s comments have reignited the debate on whether cryptocurrencies should be considered securities or commodities.
In the United States, the SEC is responsible for regulating securities, while the Commodity Futures Trading Commission (CFTC) oversees commodities. If cryptocurrencies are classified as commodities, the CFTC would have jurisdiction over them, and they would be subject to its regulations.
Some experts believe that treating cryptocurrencies as commodities would be beneficial for the industry because it will provide regulatory clarity. It will also encourage more institutional investors to enter the space, leading to increased liquidity and more stable prices.

Impact on Investors

Treating cryptocurrencies as commodities could have a significant impact on investors. With the CFTC regulating cryptocurrencies, investors will have more protection against fraud and market manipulation. They will also have access to more reliable price information, which will enable them to make more informed investment decisions.
However, it’s important to note that treating cryptocurrencies as commodities does not mean that they will be exempt from taxes. Just like any other commodity, investors will be required to pay taxes on profits made from trading cryptocurrencies.

Conclusion

The debate on whether cryptocurrencies should be treated as securities or commodities has been ongoing for a while now. Gary Gensler’s recent comments on the matter have brought the discussion back to the forefront. While treating cryptocurrencies as commodities does have its benefits, it’s important to approach the matter with caution. As the industry continues to grow and evolve, it’s crucial to establish clear regulatory frameworks that will protect investors while fostering innovation.

FAQs

1. What does it mean to classify cryptocurrencies as commodities?
A: Classifying cryptocurrencies as commodities means that they would be subject to the regulations set forth by the Commodity Futures Trading Commission (CFTC) rather than the Securities and Exchange Commission (SEC).
2. What impact will this have on investors?
A: Treating cryptocurrencies as commodities will provide investors with more protection against fraud and market manipulation. It will also enable them to make more informed investment decisions.
3. Do investors still need to pay taxes?
A: Yes, investors will still need to pay taxes on profits made from trading cryptocurrencies, just like any other commodity.