Regulations

Cryptocurrencies deemed commodities by U.S judge

The commodities market sees the addition of cryptocurrencies

The federal judge has ruled that cryptocurrencies will be treated as commodities, within a regulatory framework by the CFTC. There have been reports that a lawsuit was filed with the U.S CFTC against a technology that an entrepreneur named Randall Crater and a company which he founded back in January. According to a report, regulators have allegedly carried out a court case of a defendant at the cost of $ 6 million for fraud against people who wanted to purchase a digital currency called My Big Coin. This has brought the cryptocurrency called My Big Coin Pay Inc., to say this has been very misappropriated for investors that have invested in this cryptocurrency with a similar name to Bitcoin. Besides this, the organization has claimed that it is backed by gold. After a ruling on Wednesday, there was stated that My Big Coin has, in fact, met the definitions of a commodity that is backed by the Commodity Exchange Act. 

According to judges after reasoning has concluded that cryptocurrencies like My Big Coin and Bitcoin, can be categorized as virtual currencies even though it does not exhibit all charateristics of a virtual currency. The judges has also stated that virtual currencies like Bitcoin are traded on US exchanges like futures, which has caused the CFTC to cover other virtual currencies as well.  The judge has also stated that: 

“ That is sufficient, especially at the pleading stage, for plaintiff to allege that my Big Coin is a ‘commodity’ under the Act. “

The Difference between commodities and securities

There is a discussion in the United Stated about the topic of digital assets acting in line with securities and commodities, appeartly different regulators perceive cryptocurriencies in different ways. Noting that there is a variety of cryptocurriencies that exhibit different characteristics which will cause regulators to approach each crypto with a different regulatory advice. However, the SEC (Securities and Exchange Commision) does not regard cryptocurrencies like Bitcoin and Ethereum as securities.

According to reports early this month there was another US District judge in the New York area that has ruled that securities laws can be applied to two cases that concerned fradulent initial coin offerings (ICOs). Because of cases like this, the judge has stated that :

“Simply labeling an investment opportunity as a ‘virtual currency’ or ‘cryptocurrency does not transform an investment contract – a security – into a currency.”

What is your opinion of these decisions to regulate cryptocurrencies? Please feel free to leave a comment down below.

coinmag

My occupation is the Research of blockchains and they're practical applications in the economy. I have graduated through various levels of education, including electrical technique, Business, Psychology, and innovative technologies.

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