CFTC says that ICO tokens are commodities – but could still be securities

Today, the LabCFTC, a fintech initiative within the Commodities Futures Trading Commission (CFTC), released a paper titled  “A CFTC Primer on Virtual Currencies.” The doc reveals the CFTC’s current stance on Initial CoinSale (ICO) tokens in relation with other agencies – though there is this disclaimer:

“This primer format is intended to be an educational tool regarding emerging FinTech innovations. It is not intended to describe the official policy orposition of the CFTC, or to limit the CFTC’s current or future positions oractions. The CFTC does not endorse the use or effectiveness of any of the financial products in this presentation.”

The CFTC is essentially saying that it has determined that virtual currencies and tokens are still commodities, but could also be securities – as the Securities Exchange Commission (SEC) has previously said this year. The CFTC’s newest thoughts on virtual currency add this SEC consideration without going back on previous designations. Back in 2015, the agency did declare that it would treat Bitcoin and other cryptographic assets as commodities. The CFTC clarified how their definition of cryptocurrency and tokens is consistent with the SEC’s:

“There is no inconsistency between the SEC’s analysis and the CFTC’s determination that virtual currencies are commodities and that virtual tokens may be commodities or derivatives contracts depending on the particular facts and circumstances.”

ICO tokens, like their underlying cryptocurrencies, are also commodities to the CFTC

Whether or not you agree with the designation of tokens or cryptocurrencies as a security and a commodity (and a property for tax purposes), the additional clarifications do somewhat clear the haze and allow bitcoin and blockchain based companies to charge forward.

Not all ICOs are dandy – and many ICOs are just straight up scams that do deserve multi-agency government crackdown. Take LangPie for example. The decision does give ICOs some additional validation and will undoubtedly be used to guide US-based ICOs, at least.

Full doc here.

What do you think about the CFTC’s suggestion that ICO tokens are both commodities and securities? Let us know in the comments below.

Caleb Chen

Caleb is a graduate of the University of Virginia where he studied Economics, East Asian Studies, and Mathematics. He holds a MSc in Digital Currency from the University of Nicosia. He believes that we are moving towards a better tomorrow, bit by bit by Bitcoin.

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