Who’s In Charge Anyway?
Are crypto coins commodities or a security? In the United States, the answer to that question will decide which regulatory agency will be responsible for overseeing crypto assets.
The SEC, regulator of investment assets, and the Commodity and Futures Trading Commission (CFTC), are currently at odds on the matter, with the heads of both agencies currently sparring.
Brian Quintenz, a Republican commissioner for the Commodity Futures Trading Commission (CFTC), tweeted ….the “ U.S. Securities and Exchange Commission (SEC) does not have jurisdiction over "pure commodities or their trading venues," including "crypto assets."
Securities and Exchange Commission (SEC) Chairman Gary Gensler said …. the rapid proliferation of cryptocurrencies and the investment products tied to them resembled the “wild west.”
Both Commissioners would like to have crypto assets under their regulatory regime, while others have pointed to the need for yet another regulator.
Are Coins Securities?
While the regulatory agency that oversees banks, the OCC, has taken steps to allow banks to custody crypto (although the actions were slightly rescinded), the overseer of the financial securities industry, the Securities and Exchange Commission (SEC), has taken a different stance.
When Gary Gensler was appointed the Chairman of the SEC, many in the crypto community were hopeful that his background—former MIT blockchain professor—would herald in easier times for the coins. That hasn’t happened.
At question are initial coin offerings, crypto exchanges and the actual coins themselves. The SEC has made clear moves over the first two, but continues to take an ambiguous approach to the actual coins. Recently it approved a crypto exchange-traded fund (ETF), however the ETF will invest in crypto exchanges, not the coins themselves. A decision on four ETFs that would invest in coins was delayed until the end of the year.
Taxing the Crypto Sector
At present, cryptocurrency is taxed as property in the United States. In other words, if you just buy and hold, you don’t have to pay any taxes. However, that may be about to change.
Similar to stocks, bonds and commodities, cryptocurrencies are taxed as securities and subject to a 30-day holding rule—which prohibits selling an investment for a loss and replacing it with the same or a "substantially identical" investment 30 days before or after the sale.