[dsg42]

The only question here is whether cryptocurrency is a security or a commodity. Securities fall under regulation by the SEC (SECURITIES and Exchange Commission). Commodities are regulated by the CFTC (COMMODITIES Future Trading Commission). SEC Chair Gensler agrees that Bitcoin is a commodity, but thinks everything else is a security.[1] Securities are much more tightly regulated than commodities. The SEC is making it clear with these complaints that they believe certain cryptocurrencies are securities.

A court might disagree. The CFTC could potentially disagree, although yesterday's agreement makes me think they may have given up on that to some extent. But I actually think it's pretty clear that any cryptocurrency project offering a reward for "staking" or similar is a security.

[1] https://www.axios.com/2022/06/28/bitcoin-is-the-only-coin-th...

[adsfgiodsnrio]

You capitalized the wrong word. The CFTC is the Commodities FUTURES Trading Commission. After all, a commodity is defined as anything traded with a futures contract (except for onions and movie tickets)!

https://www.law.cornell.edu/definitions/uscode.php?width=840...

A whole lot of things that aren't commodities in common parlance are within the jurisdiction of the CFTC because they are traded with futures contracts. This includes some securities. A whole lot of things that are commodities in common parlance are not within its jurisdiction, as the CFTC only deals with futures contracts.

Orange juice concentrate is a commodity by any definition. The CFTC regulates futures contracts on orange juice concentrate. It does not regulate its production, sale, transportation, or anything else unrelated to futures contracts. That is the job of the USDA, FDA, DoT, and so forth.

Stocks are securities. As they are traded with futures contracts, they are also commodities. The CFTC regulates futures contracts on securities jointly with the SEC. It does not regulate any trading of securities that does not involve futures contracts. That is the job of the SEC. The fact that people trade stocks with futures has never hampered the SEC's efforts to regulate them.

https://www.cftc.gov/IndustryOversight/ContractsProducts/Sec...

[dcow]

Curious: is "bitcoin" being used by the SEC as a general term to mean "all cryptos that fundamentally employ a work-based consensus algorithm", or "pure" cryptos or whatever? Or is it not yet clear to the SEC that there are more instances of Nakamoto consensus networks out there and not everything other than BTC is a security?

I agree that staked projects and derivative projects are securities since they are fundamentally a representation of or proxy for the actual thing of value, BTC, XCH, formerly ETH, etc.

[potatototoo99]

Of course not everything other than bitcoin is a security. My private blockchain no one knows about is not a security. It's not a universal law of the universe.

What they mean is every coin/token they looked at. If asked to evaluate litecoin for example probably they'd say it's not a security as well. They don't need to pass judgement on each of the thousands of coins individually because definitions and common sense exists.

[dcow]

I’m just trying to understand the context. I hope it is as you say and it would be my baseline assumption that it is as well. But it’s not unquestionably obvious given history and what relatively little context is present in this thread. The SEC used to think all crypto is a security to the point where honest miners are instructed to declare blockchain rewards as income (I have, and TurboTax even asks you if you acquired crypto in the last year with no nuance as to how you acquired it or which one you acquired). It may be obvious to you and me but my question was more about how far the SEC’s understanding has evolved.

[whimsicalism]

They refuse to offer guidance even on the largest cryptocurrencies outside of BTC.

[ForHackernews]

It's obviously gambling and should be regulated as such: https://www.theguardian.com/technology/2023/may/17/cryptocur...

Commodities have real-world uses (e.g. gold, oil, frozen orange juice), securities represent a claim on some productive enterprise. Cryptocurrency is neither.

[darksaints]

Gambling happens in real world markets as well, but that doesn't mean that real world markets are casinos.

Beaniebabies were effectively regulated and taxed like commodities. Commodities do not require a real-world use. All they are are tradable non-currency things which can result in capital gains.

The speculative (HODL!!) cryptocurrencies should probably be treated like commodities, and regulated as such by the CFTC. The cryptocurrencies that are actually being used like currencies (e.g. actually used to buy things) should be regulated like foreign currencies, which would also be regulated by the CFTC (this is essentially the same exact thing as Commodities trading, but with simpler accounting rules which reflect the much higher liquidity, divisibility, and likelyhood that a unit changes hands). Neither of these scenarios involve the SEC. The SEC should only be involved when coins are being issued like securities (e.g. as a way to raise funding and sell financial stakes in some kind of enterprise).

[ProjectArcturis]

IIRC beanie babies and similar are classified as "collectibles" and have different (worse) tax treatment than commodities.

[darksaints]

Collectibles are just a subclass of Commodities which can't be taxed using Mark To Market rules, but there are a whole host of commodities which are just like that. Precious metals, rare coins, cards, comics, etc., are all collectibles, but they are still commodities for regulatory purposes. For example, here is PR release of a CFTC enforcement action against some fraudulent coin dealers: https://www.cftc.gov/PressRoom/PressReleases/8694-23

IIRC, the IRS and CFTC have already issued rules to treat NFTs as collectibles.

[ForHackernews]

> The cryptocurrencies that are actually being used like currencies (e.g. actually used to buy things

So... none of them? How long are y'all going to carry on this charade?

[darksaints]

How long are you gonna bury your head in the sand? There are millions of ways to buy actual things with Bitcoin.