Bitcoin is now officially “commodity” … What does it really imply?
By Claire L.
US Commodities Futures Trading Commission headquarter
Bitcoin is now officially a commodity. Last Thursday, CFTC (Commodities Futures Trading Commission) asserted that bitcoin is commodity. “CFTC considers bitcoin and other virtual currencies as a commodity which will be regulated under the Commodity Exchange Act,” CFTC official said on its website.
Now bitcoin became a commodity in US. This will raise the voice of bitcoin enthusiasts who kept saying bitcoin has ‘value.’
Is bitcoin really defined as a commodity because it is ‘valuable?’ Is bitcoin finally getting admitted by people? Or, like the predictions of renowned CEOs, saying bitcoin will disrupt the current economic system, did CFTC really recognized the possibility of cryptocurrency? If you take a closer look on this matter, you can’t take this as a true positive step of bitcoin.
Bitcoin as a “commodity” … and the side effect
When CFTC announced this statement about bitcoin, it settled charges against Coinflip, a small business which dealt with bitcoin derivatives. Coinflip now currently shut down its business because it did not registered its business to CFTC even though they were marketing bitcoin derivatives which is considered as a ‘commodity.’ This enforcement action will affect many businesses relating to bitcoin. When a merchant offers bitcoin derivative services, it should be registered to CFTC.
Is Coinflip really a victim by this sudden regulation? Ironically, CFTC did not charge any fine to Coinflip. Actually, Coinflip is a small business which has user base less than 400 and it didn’t even have an ability to pay the fine. What does this truly mean? : The first part of more regulations against cryptocurrency.
This announcement of CFTC enabled it to take an enforcement action against any businesses which provides derivatives to US citizens. This can be linked with the expansion of cryptocurrency regulation. The definition of bitcoin as a commodity can be translated into a new obstacle of crypto not only as a positive step of its future.
During this year, there were a couple of new regulations against bitcoin. New York state have all bitcoin businesses in New York state to get BitLicense. As you can expect from its name, it is the license you must have if you provide services relating to bitcoin to New York residents. The goal of BitLicense is to prevent consumers from bitcoin money laundering and make a cyber security guideline. When the BitLicense rule was announced, Bitfinex, which has the biggest bitcoin exchange volume with Coinbase, closed its service in New York. Korean bitcoin exchange, Korbit, also stopped providing service in New York.
The announcement from Korbit about BitLicense
Australia said it deems bitcoin as a regular currency last August. It was been a year since Australia Taxation Office classified bitcoin as an ‘intangible asset.’ After this statement, many expected removing GST (Goods and Services Tax) from bitcoin. But from last week, major Australian banks started to close accounts of bitcoin businesses and traders. Who will be affected most if bitcoin gets popular among people as a currency? : The banks.
Like this, positive statements on bitcoin is not always ‘positive.’
Nobody can be sure whether CFTC actually shut down Coinflip only to make the derivative market safer. It can be interpreted positively. But at the same time, it also implies more cryptocurrency regulation. We cannot deny the possibility of it.
By Claire L.