How does the commodity vs. security debate really affect crypto?

Commodities are basic goods (think gold, oil, tin, etc.), typically regulated by the Commodity Futures Trading Commission (CFTC), and are generally subject to less strict oversight than securities (think stocks, ETFs, bonds, etc.), which are regulated by the Securities and Exchange Commission (SEC) in the U.S.

Most crypto fans tend to argue that Bitcoin in particular is far more similar to gold than it is to a stock or ETF and therefore deserves the more lenient CFTC-regulated commodities treatment.

That really isn't a crazy stretch, but the conversation gets a little more messy when discussing alt coins with more unique tokenomics like reflections or token buybacks.

While the SEC has already taken many of these smaller alt coin issuers to court, claiming they are operating as unregistered securities, recent comments from CFTC officials have shone a far more optimistic light on the future classification of larger, more decentralized cryptocurrencies like Bitcoin and Ethereum. 

Just this week, Rostin Behnam, chief of the CFTC, spoke before the U.S. Senate Committee about a July 3rd ruling in Illinois over a $120 million crypto Ponzi scheme case.

And, somewhat surprisingly, the Illinois district court judge ruled that both Bitcoin and Ethereum qualify as commodities under the Commodity Exchange Act.

This is just one judge's opinion, but it sets an important precedent.

Friendly crypto regulation under the CFTC would not only free up some much-needed breathing room for crypto innovation in the United States, but settling the debate on either side would finally provide the clarity needed for crypto projects to safely continue operating in the U.S. (Even if all tokens end up getting lumped together as securities).

With more testimonies like Behnam's being brought before the senate, it's starting to feel like real progress is finally being made.

I just hope the U.S. doesn't lose all of its promising new crypto startups to more friendly foreign nations in the meantime.

Either way, we'll always have Giddy. ❤️

- Joey Segura