2 min read | 8 months ago

US Regulators Need to Classify Cryptocurrency


A research centre called CATO published an analysis about US cryptocurrency regulation. The proposal states that US regulations should treat cryptocurrency as commodities in most situations.


CATO is a non-profit American company that is trying to promote public policy and create a peaceful international relationships. Diego Zuluaga, policy analyst for Center for Financial and Monetary Alternatives at CATO, analyzed “a two tier regulatory structure for ICOs.”


Since SEC and CFTC regulators did not have a clear statement about cryptocurrencies, Zuluaga in his article has clarified ICO to push US regulators.


“I propose that the SEC and CFTC formally establish a distinction between functional cryptocurrencies, such as Bitcoin and Ethereum, and promises of cryptocurrencies to be delivered in the future. Cryptocurrencies in the first category do not meet the criteria for a security and should be regulated as commodities. Those in the second category may be securities, depending on the individual circumstances of each issue,” Zuluaga wrote.


When a company first launches cryptocurrency, they always call it an Initial Coin Offering (ICO). From this perspective, ICOs should be recognized as securities. However, digital currencies which have already circulated on the market should be considered commodities.


Zuluaga emphasized that the ICO clarification is significant to blockchain development, and he also added that “such an approach would strike the right balance between concerns over fraud and consumer protection while ensuring that the benefits of ICOs as a new vehicle for democratized capital formation are realized in the United States.”



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