Crypto and CFTC - derivatives may help define the future status of cryptos

Is Bitcoin a currency or a commodity?

Remarks of Commissioner Dawn D. Stump Before Texas A&M’s Bitcoin Conference, 16 April, 2021.

She was speaking as Commissioner of the Commodity Futures Trading Commission (CFTC), that, as the name suggests, oversees trading in derivatives.

Today, we oversee a $400 trillion derivatives marketplace.

Well, that puts Bitcoin's market value into some perspective - and that's just in the USA.

The CFTC has determined that bitcoin fits the legal definition of a “commodity” under the CEA. But treating bitcoin as a commodity is no more surprising or unusual than, say, treating corn, oil, or copper as a commodity, given the breadth of the CEA’s definition of the term “commodity.

Notice this skirts the issue of whether Bitcoin is a commodity; the mere fact that derivatives are traded means it can be roped into the definition. Note also that Bitcoin is not traded as a "currency" derivative.

This is important because as the SEC fiddles around, the CFTC can take decisions about the "BTC derivatives" even as no decisions are made about the status of the underlying asset - in this case, Bitcoin (or Ripple).

Worth reading her whole reasoning, as she concludes:

That is, the public should be aware that where cash commodity markets are concerned, limited enforcement authority (anti-fraud/manipulation, as opposed to day-to-day regulatory oversight) is bestowed upon the CFTC as a tool to assist in its primary function of regulating derivatives products, such as futures. However, we are not in the business of regulating bitcoin transactions or the individuals or entities that buy, sell, transfer, or store bitcoin.

All of which sets the stage for actions such as the CFTC investigations into Binance's trading in the US.