SEC, CFTC, IRS And Others: A Guide To US Regulating Bodies

There are currently a number of federal regulators involved in crypto, and all of those bodies view cryptocurrencies like Bitcoin differently - defining it as a security, money, property or a commodity.

In the US, Congress holds supreme power over federal regulatory agencies such as the CFTC and the Securities and Exchange Commission, enforcing them to comply with the laws it issues.

Recently, the SEC elaborated on its views regarding crypto and said that it is looking to apply securities laws to everything from cryptocurrency exchanges to wallets.

ICOs appear to be the agency's primary focus, as in February 2018 the SEC came through with a sweeping probe, issuing subpoenas to shut down a number of "Unregistered securities" among ICOs.

Recently, SEC Commissioner Robert Jackson called the ICO market a prime example of an unregulated securities market in an interview with CNBC:."If you want to know what our markets would look like with no securities regulation, what it would look like if the SEC didn't do its job? The answer is the ICO market".

As CFTC Commissioner Brian Quintenz explained, "Crypto-tokens offered in a pre-sale can transform. They may start their life as a security regulated under the SEC from a capital-raising perspective but then at some point - maybe possibly quickly or even immediately - turn into a commodity."

The US Office of Foreign Assets Control, an agency of the US Treasury Department that enforces economic sanctions in support of US national security and foreign policy, seems to treat cryptocurrencies as money, or fiat currencies.

Although it's not completely clear how OFCA will obtain crypto wallets of those on the SDNL, in March, classified documents obtained by Edward Snowden revealed that The US National Security Agency managed to create a system to track down and deanonymize cryptocurrency users.

Mike Lempres, Chief Legal and Risk Officer at Coinbase, stressed that the "Tremendous potential" of the digital currency's technology can be only achieved through "Responsible regulation.", while at the current stage, the US regulatory system "Is harming healthy innovation" due to a lack of understanding of what should be allowed and what should be not, and how digital assets should be considered; either as securities, commodities, property, or money.

Defining cryptocurrencies as an asset is indeed tricky: some cryptocurrencies might look like securities, while others act like commodities.