On September 17, 2015, the U.S. Commodity Futures Trading Commission (CFTC) officially declared Bitcoin a commodity, a distinction that eight years later continues to set it apart from other cryptocurrencies that have yet to earn this status.

While regulatory uncertainty still looms over other more centralized, digital assets, the CFTC’s classification of Bitcoin as a commodity established a regulatory framework for Bitcoin, one that allows it to be treated like other classical commodities including gold and precious metals.

In its ruling, the CFTC stated that Section 1a(9) of the CEA defines commodity to include “all services, rights, and interests in which contracts for future delivery are presently or in the future dealt in.”

“The definition of a ‘commodity’ is broad… Bitcoin and other virtual currencies are encompassed in the definition and properly defined as commodities,” the agency wrote at the time.

The U.S. Securities and Exchange Commission (SEC), under the leadership of Chairman Gary Gensler, has been actively scrutinizing various digital assets to determine whether they should be classified as securities, an ongoing evaluation that has created a complex and evolving landscape for altcoins.

In recent remarks, Chairman Gensler reiterated the SEC’s commitment to maintaining a strong regulatory framework for cryptocurrencies. He emphasized that the distinction between commodities and securities depends on the specific characteristics of each digital asset. 

Gensler acknowledged that while Bitcoin, due to its decentralized nature, qualifies as a commodity, other cryptocurrencies exhibit traits that might classify them as securities.

The determination hinges on factors like the degree of centralization, utility, and the presence of third-party entities. Gensler’s remarks underscore the ongoing debate within regulatory circles about how to classify cryptocurrencies effectively. 

Of much debate has been the Howey Test, the regulatory standard set in the 1900s that seeks to establish when a certain investment offers the promise of a financial return from the work of others. 

Crucially, Bitcoin, with its use of proof-of-work as a consensus mechanism allows anyone in the world who can generate electricity to purchase or create a mining machine, whose calculations can enable that participant to claim the new cryptocurrency that it creates.

This distinction separates Bitcoin from the ambiguity surrounding other altcoins, and continues to be a major catalyst for Bitcoin’s legitimacy and growth in the financial markets at a time when the regulatory status of other cryptocurrencies, at least in the United States, remains mired in uncertainty. 

The 8th anniversary of Bitcoin’s classification as a commodity is a reminder of the progress made in this regard, even as other cryptocurrencies await definitive regulatory guidance from the SEC. 

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The top Democrat on the House Intelligence Committee has warned that China and Russia would seek to exploit the chaos resulting from a U.S. default. He further cautioned that the U.S. dollar’s reserve currency status could be eroded if the U.S. defaults on its debt obligations.

U.S. Lawmaker’s Debt Default Warning

Congressman Jim Himes (D-CT), the ranking Democrat on the House Intelligence Committee, warned Sunday during an appearance on CNN’s “State of the Union” about the risks of the U.S. defaulting on its debt obligations.

The lawmaker was asked whether the current U.S. “debt crisis” is “a national security threat” and whether any world leaders have expressed concern to him about it. Avril Haines, Director of National Intelligence, informed the Senate last week that Russia and China would try to exploit the chaos resulting from a U.S. default to show that “We’re not capable of functioning as a democracy.”

Himes replied, “It has not come up in the meetings that we had in Jordan and Israel and Egypt,” emphasizing:

But, of course, the Russians and the Chinese would seek to exploit it. The United States has never really come close to defaulting on its debt before. So it’s hard for us to imagine what that might look like. But, of course, it could be catastrophic.

“Frankly, the full faith and credit of the United States is the bedrock on which the global financial system is built,” he noted.

The congressman stressed that if the U.S. debt default comes into question, “all kinds of things could happen.” He warned:

The U.S. dollar could … its position as the global reserve currency could be eroded. People may choose to invest in the United Kingdom or in the European Union, rather than the United States.

U.S. Treasury Secretary Janet Yellen said last week that the Treasury may not be able to pay all of the government’s bills as early as June 1 “if Congress does not raise or suspend the debt limit before that time.”

On Sunday, Yellen also warned on ABC’s “This Week” that if Congress fails to act on the debt ceiling, it could lead to a “constitutional crisis” with implications for financial markets and interest rates. Additionally, she cautioned that not raising the debt ceiling would result in a “steep economic downturn” in the U.S. The Treasury Secretary said:

There is no way to protect our financial system and our economy other than Congress doing its job and raising the debt ceiling and enabling us to pay our bills. And we should not get to the point where we need to consider whether the president can go on issuing debt. This would be a constitutional crisis.

Do you think Russia and China will take advantage of the chaos if the U.S. defaults on its debt obligations? Let us know in the comments section below.

Kevin Helms

A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography.