Bitcoin and cryptocurrencies in general exhibit specific essential characteristics of the different asset classes. This assertion was made by Cryptodad Christopher Giancarlo, the chairman of the U.S. Commodity Futures Trading Commission (CFTC). There is currently no consensus as to the exact asset definition for cryptocurrencies.
The debate over whether ICO tokens are utilities or securities continues to rage on with regulatory bodies and crypto entrepreneurs on either side of the aisle. There is also another debate on whether some cryptocurrencies like bitcoin should be classified as currencies or commodities.
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Bitcoin has Elements of Different Asset Classes
According to Giancarlo, bitcoin exhibits the traits of currency, security, and, and digital coin. Cryptos in general function as both assets and forms of payment making them behave like virtually all asset classes at once. He made this known in an interview with CNBC during a live session of the yearly Milken Conference in Los Angeles.
He also said bitcoin, in particular, has some attributes that are similar to the way gold behaves as an asset. Bitcoin has been likened to gold by many experts and commentators. Some have even taken to calling bitcoin “the digital gold.” The CFTC chairman seems to agree with these commentators saying that bitcoin is just like gold, the only difference being that while gold is physical, bitcoin is virtual.
Bitcoin is best Suited to HODL Rather than Payments
The CFTC chief also touched on another debated topic regarding bitcoin, and that is its suitability as an investment or as a currency. Giancarlo opined that bitcoin does not work well as a currency. According to him, the popular crypto is more suited for long-term investment.
Bitcoin is notoriously volatile, as are cryptocurrencies in general. Between November 2017 and February 2018, the price of bitcoin rose from $6,000 to nearly peaking at $20,000 in mid-December before plunging to below $6,000 in early February. Such violent price swings are not a desirable trait in a currency where stability is required to support commerce and trade.
Current Financial Regulations Might be too Outdated for Bitcoin
Speaking on the subject of regulations, the CFTC boss said that there are elements of cryptocurrencies that are subject to Commission’s rules. He, however, said that these elements depend on the context of the regulatory regime under which they are viewed. The scope and jurisdictive authority of regulatory bodies over cryptocurrencies is an ongoing debate in many countries.
Giancarlo also declared that the current financial regulations might be inadequate or at the very least outdated, to efficiently regulate the cryptocurrency market. He pointed out that the current charter of SEC and CFTC regulations were developed in the 1930s. The crypto market is less than a decade old and appears to be demonstrably more complicated than other asset classes. Newer laws more tailored to the nascent cryptocurrency market might be required. He also said that:
“At the end of the day, it’s for Congress, and not regulators, to decide whether new policies should be evolved for these new asset classes.”
In a recent Senate hearing, he told senators that a measured regulatory approach that respected the wishes of the present generation was the best way to go about regulating cryptocurrencies.
The SEC has been ramping up its effort to regulate the crypto market with a particular focus on ICOs while major Silicon Valley VC firms have begun intensive lobbying efforts to ensure crypto-friendly regulations. The CFTC has urged crypto market stakeholders to form a self-regulatory body.