J Christopher Giancarlo, chairman of the Commodity Futures Trading Commission (CFTC), asserted that cryptocurrencies were considered commodities under the CFTC’s jurisdiction, during an interview with the Fox Business television channel.
Giancarlo, who stated that “in 2015, [the CFTC] declared cryptocurrencies to be a commodity under our jurisdiction”, cited two recent federal court rulings confirming the agency’s jurisdiction to that effect.
The chairmen went on to emphasize a “two-handed approach” to regulating cryptoassets -- on one hand coming down hard on “scammers and fraudsters”, while on the other adopting a “do no harm” approach that will not stifle innovation.
In Giancarlo’s view, the entrance of more institutional investors will foster “more maturization [sic]” of the crypto industry, although there is “a long way to go”. He pointed to the regulated bitcoin futures markets on both the CME and CBOE as having “sapped the bitcoin bubble” of late 2017, achieving “in some people’s view [...] a more sustainable level” of price volatility.
Cryptoassets Tamed by Futures Markets
The two rulings referred to by Giancarlo, which support the CFTC’s jurisdiction to regulate cryptoassets, seem to define any cryptoasset tradable with bitcoin as a future-tradable commodity regulated by the CFTC, because bitcoin itself -- as previously noted -- is futures-tradable under the jurisdiction of the CFTC.
Since every virtual currency or asset is tradable with bitcoin at some point, including scam coins or other fraudulent schemes, it would seem that nearly every virtual asset could be considered a commodity within the CFTC’s remit.
A key passage can be found in Judge Rya Zobel’s ruling at the U.S. District Court for the District of Massachusetts, that a commodity is anything “in which contracts for future delivery are presently or in the future dealt in.” The ruling came in a judgement for damages caused by alleged scam coin “My Big Coin”.
What’s a “Cryptocurrency”?
It would seem these rulings added yet more arguments to the thorny issue of how cryptoassets are to be classified and regulated in the eyes of the U.S. federal government; as commodities, currencies or securities. Earlier this year, Giancarlo himself described the complexity of defining the new asset class.
There has been a noted lack of clarity on the U.S. government’s part, regarding which assets are to be considered commodities regulated by the CFTC, and which are to be considered securities regulated by the SEC. Some fear that lack of clear regulation will cause innovators to flee the U.S. in favor of clearer regulations in other countries.
Giancarlo has recently become the darling of the cryptoasset community for his seeming advocacy of the technology's legitimacy and utility outside of the criminal world, testifying in a U.S. Senate committee that his own niece was invested.