This week, the US federal district judge ruled that the cryptocurrency suspected of fraud was in line with the definition of the commodity. As a result, these cryptocurrencies are within the purview of the Commodity Futures Trading Commission (CFTC), and the CFTC has long believed that virtual currency is a commodity.
The way the US regulates cryptocurrencies is very complicated. Although Congress has the highest authority over federal regulators such as the US Securities and Exchange Commission (SEC) and the CFTC, so far, Congress has not issued any guidelines on this matter.
Since there are no clear regulatory principles that can be followed by all agencies, each regulator has taken its own approach, even if it conflicts with the views of other agencies. That is, the US Securities and Exchange Commission treats cryptocurrencies as securities, while the CFTC treats them as commodities, and both regulators try to argue their views in court.
However, these different views actually seem to coexist. CFTC Commissioner Brian Quintenz explained in an interview with Bloomberg in October 2017 that the crypto tokens issued in the pre-sale can be converted. From the perspective of capital raising, these tokens can be regarded as securities, by the US Securities and Exchange Commission. Regulatory, but at some point, it may turn into commodities soon or even immediately.
On September 26, Judge Rya W. Zobel of the Massachusetts District Court dismissed Randall Crater and his company My Big Coin Pay Inc.’s motion, which again confirms the CFTC’s view that cryptocurrency is a commodity.
CFTC believes that Crater’s Nevada-based company My Big Coin Pay is a cryptocurrency fraud project that offers a full-featured virtual currency called My Big Coin (MBC). The details of the case show that the defendant tricked the customer into purchasing the MBC through a false statement. Specifically, they falsely claim that MBC is supported by gold, can be used anywhere they accept Mastercard, and is actively trading on various exchanges. Regulators believe this violates the Commodity Exchange Act (CEA).
Despite several key victories in court, the CFTC still handles cryptocurrency fraud on a case-by-case basis. Regulators still seem to lack the power to monitor and ban suspicious items on a large scale, but it is equally important that the CFTC has been carefully handling cryptocurrencies alike nem coin
, neo coin
and dash coin
. In fact, in an interview with CNBC in September, CFTC Chairman Christopher Giancarlo emphasized that cryptocurrencies require regulators to take a non-harmful approach in order to thrive.
The recent actions taken by the CFTC are seen as part of a general trend in the past few months for US regulators to expand their privilege in the cryptocurrency industry. Despite this, there is no indication that comprehensive cryptocurrency legislation will soon emerge. In May of this year, Giancarlo said that he does not believe that the federal government will issue such a framework in the near future, and pointed out that the regulations governing the operation of the CFTC were published in 1935, and new and innovative technologies like Bitcoin currency
take time to digest.