In a blatant attempt to make a claim on regulating cryptocurrencies, the Commodity Futures Trading Commission (CFTC) has stepped forward to formally declare Bitcoin is a commodity. Commodities of course fall under the jurisdiction of the CFTC which is why we can assume they made the declaration. Although this appears to be a power grab, it could have larger implications beyond the inter agency fighting for dominance over cryptocurrencies. With Bitcoin officially being ruled a commodity, it has potential to be a worldwide, widely traded investment. Ruling Bitcoin a commodity was done officially, by the CFTC and they are setting up to assume regulatory responsibility over the digital asset.
Looming on November 5th is the official SEC ruling on proposals for Bitcoin ETFs and the ruling by the CFTC could increase the chances that Bitcoin-backed ETFs will be approved and introduced. Naturally, as institutional investors and a flood of new investments pour into the Bitcoin market, the prices are likely to explode. And with the ultimate supply of Bitcoin permanently capped at 21 million, it is relatively rare in comparison to just about every other traded commodity. There will never be more than 21 million Bitcoin, and even scarce commodities like precious metals could theoretically be mined from asteroids or discovered under the earths crust, drastically increasing their supply with little warning.
The rarity combined with the flood of investors into the Bitcoin market could cause its price to rapidly grow. Furthermore, BTC’s ability to be traded as a global commodity creates a larger market than what has previously existed, combined with a relative scarcity as far as a traded commodity grows. Essentially, what this means is all the factors that push the price up of a commodity are about to be in place for Bitcoin, and only time will tell how high the price goes.
The end result is to be seen, as the CFTC, SEC, FINCEN and a number of other agencies may continue to battle for regulatory oversight of cryptocurrencies.
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