The U.S. District Court ruled that the tokens be under the control of the Commodity Futures Trading Commission (CFTC), which classifies it as a commodity. But is it fair to say that this decision has created a precedent in the field of cryptocurrency regulation?
In the United States, there is still no clear position on digital money, so every government agency treats virtual money in its own way. Such ambiguity creates difficulties for traders and ICO creators, who have to adjust to the regulations of all regulatory institutions at once, even if their provisions contradict each other.
Let's see how different US agencies classify digital assets:
The Internal Revenue Service (IRS) considers cryptocurrency trading to be a business, so since 2014 income from digital assets is taxed. This department uses the latest software to track all operations of cryptocurrency exchanges. Defaulters face criminal prosecution.
The Financial Crimes Enforcement Network (FinCen) has assigned a cash status to virtual assets. This means that the sale of cryptocurrency is regulated by the Bank Secrecy Act.
The Office of Foreign Assets Control (OFAC) includes the cryptocurrency in fiat money. Due to this digital assets are automatically subject to sanctions imposed on paper money.
The United States Securities and Exchange Commission (SEC) considers cryptocurrency to be a type of securities. So SEC instructs companies creating the ICOs to comply with the same rules that govern securities. For example, digital assets need to be registered.
CFTC ranks tokens to the underlying assets, implying that a virtual currency is a conditional "gold".
As you can see, digital assets are controlled by different agencies, but the position of the CFTC is now fixed by the Court. How will this affect the cryptocurrency market?
Financial expert and blockchain adviser Andrew ROSENBAUM explained: when the court finally approves the status of virtual assets as a commodity, it will not be the final decision on the regulation of the digital market. The fact is that other agencies will continue to focus exclusively on their regulation rules. That is, the status of bitcoin as a commodity in the CFTC will not affect the status of bitcoin as a security in the SEC. Andrew ROSENBAUM believes that the digital market needs clarity, the cryptocurrencies should be controlled by one agency. Digital assets need a single status: “What is really needed is a legislative action that would classify what kind of asset cryptocurrencies are, and who should regulate it. France has recently made progress with a law, which made a new asset class for digital currency, and the U.S. Congress should create a bill according to this model".
But why is there still no single regulatory law on cryptocurrencies? CEO of a consulting company and investor Drs. Hans KONING told Bitnewstoday.com that the confusion in the regulation of digital assets and the long absence of a clear legal framework in the USA are not accidental. It is beneficial for banks to keep the digital market outlying as long as possible: “There have been some stakeholders in the crypto market who have tainted the market, and have created confusion and ambiguity without allegedly knowing. The whole security token debate and subsequently constantly changing definitions is a classic example of that. These regulatory discussions and the unclear status of the cryptocurrency are proof of this. And the negative role is played equally by scams, and state financial institutions, which are trying to prevent the development of the crypto market by all means”.Traditional financial institutions do not want to give up without a fight, not only in the USA but also, for example, in Latin America and China. According to Mr. KONING, the reason is that banks are afraid to lose their position. If Bitcoin becomes more popular than the Dollar, old financial institutions will face the outflow of investment.