While there are countries such as the UK where Bitcoin is widely supported by the government, and implemented into many parts of people’s daily lives, there are also places where the digital currency is seen as anything other than an actual currency.
Such is the example of the United States Government, which has been refraining from calling Bitcoin a currency. In fact, it’s not surprising that the world’s richest country when it comes down global finance has decided to define Bitcoin as a commodity. This comes as a response to the settlement between the Commodities and Futures Trading Commission with Coinflip, Inc., after the company’s CEO reportedly operated an exchange which sold Bitcoin without following the appropriate regulations defined for it.
A press release sent out by the Commodities and Futures Trading Commission stated that: ‘“In this order, the CFTC for the first time finds that Bitcoin and other virtual currencies are properly defined as commodities”.
While last year, Bitcoin had taken another similar hit from the US Government, when the IRS ruled that it was going to treat Bitcoin like property, rather than currency, therefore allowing the gains from the sales of the cryptocurrency to be taxed.
While the decision is a bit of a shock to the digital currency market, it is important to elaborate on what this means for Bitcoin. Well, as you may already know, bitcoin is technically a virtual currency which can be exchanged by people for goods and services. As there is no central bank issuing them, and no central authority to track the bitcoin transactions, the technology has become an advocate for privacy, anonymity, while also angering few governments, as there was no legislative framework allowing for its taxation.
During the last couple of months, many US-based Bitcoin exchanges had to close their gates due to pressure put onto them by the US authorities, which required a large investment, and tons of money to allow Bitcoin exchanges to become officially registered in a state. As Bitcoin is now treated as a commodity, rather than property or currency, things are about to change, as the laws treating it will be similar to those applied for other commodities such as gold. However, it is important to note that the decision is not necessarily bad news for the cryptocurrency, as no one has yet taken its privacy away, and people can still use it freely. The only difference is that there are now clearer taxation laws, for those who run bitcoin-based business, and earn money from trading the digital currency.
Based on everything that has been outlined so far, what do you personally think about the decision taken by the CFTC? Let us know your thoughts in the comment section below.