On September 17, 2015, the U.S. 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 earn this status.
While regulatory uncertainty still looms over other more centralized, digital assets, the CFTC's classification of Bitcoin as a commodity established a regulatory framework for Bitcoin, one that allows it to be treated like other classical commodities including gold and precious metals.
In its ruling, the CFTC stated that Section 1a(9) of the CEA defines commodity to include "all services, rights, and interests in which contracts for future delivery are presently or in the future dealt in."
"The definition of a 'commodity' is broad... Bitcoin and other virtual currencies are encompassed in the definition and properly defined as commodities," the agency wrote at the time.
The U.S. Securities and Exchange Commission (SEC), under the leadership of Chairman Gary Gensler, has been actively scrutinizing various digital assets to determine whether they should be classified as securities, an ongoing evaluation that has created 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 distinction 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 traits that might classify them as securities.
The determination hinges on factors like the degree of centralization, utility, and the presence of third-party entities. Gensler's remarks underscore the ongoing debate within regulatory circles about how to classify cryptocurrencies effectively.
Of much debate has been the Howey Test, the regulatory standard set in the 1900s that seeks to establish when a certain investment offers the promise of a financial return from the work of others.
Crucially, Bitcoin, with its use of proof-of-work as a consensus mechanism allows anyone in the world who can generate electricity to purchase or create a mining machine, whose calculations can enable that participant to claim the new cryptocurrency that it creates.
This distinction separates Bitcoin from the ambiguity surrounding other altcoins, and continues to be a major catalyst for Bitcoin's legitimacy and growth in the financial markets at a time when the regulatory status of other cryptocurrencies, at least in the United States, remains mired in uncertainty.
The 8th anniversary of Bitcoin's classification as a commodity is a reminder of the progress made in this regard, even as other cryptocurrencies await definitive regulatory guidance from the SEC.