Commodity Futures Trading Commission (CFTC) Chair J. Christopher Giancarlo argued that cryptocurrencies such as Bitcoin could solve currency issues in countries where fiat is not stable or properly backed by a central authority. He cautioned, however, that the CFTC and SEC needed time to properly understand crypto technologies and effectively regulate them.
Just recently, Venezuela released its nationally-backed currency, Petro, which has faced adoption issues but nonetheless has spurred thousands of Venezuelans to download cryptocurrency wallets. The fact that the Bolivar has been inflated to near-worthless value has helped motivate this transition.
Yesterday, a US Federal Court ruled that virtual currencies were commodities, not securities. That's important for the future of crypto, since it allows the CFTC to investigate cryptocurrencies for fraud and ostensibly make the overall market safer and more accessible. Further, if cryptocurrencies are seen as securities and not as commodities, a whole host of new regulatory concerns become possible.
I think these are positive steps for crypto regulation, but I have two concerns:
Commodity is still a blunt term for an instrument which, in my opinion, requires its own legal designation. Cryptocurrencies don't always behave like conventional commodities such as oil, which typically suffer in high-inflationary environments (thus, why Venezuala is using crypto to counteract inflation). This could lead to weird regulatory outcomes where policies designed to help commodities, or curb their bubbles, have the opposite effect on cryptocurrency.
This doesn't get the ball rolling in its own right. Until we see institutions such as the SEC and CFTC make concrete gains in understanding, regulating, and promoting cryptocurrency, it's going to be difficult to count on widespread adoption. This is particularly concerning, given that many authorities and thought leaders in finance (Jamie Dimon) are still highly skeptical of crypto as a whole.
What do you think? Let's hear it.
Sources:
https://cryptoupclose.com/virtual-currencies-are-commodities/
https://oracletimes.com/venezuela-to-officially-release-its-oil-backed-petro-ptr-cryptocurrency/