According to an expert in international banking law, regulators have misunderstood cryptocurrencies and need to alter their course urgently. He asserted that tokens should not be treated like fiat nor should Bitcoin (BTC) have any futures contracts. The expert who made this claim is Emilios Avgouleas a Professor in International Banking Law and Finance at the University of Edinburgh. Avgouleas who is also affiliated with IOHK has expressed fears that unless the digital asset sector becomes serious about how crypto should be defined, regulators are on course to destroy it.
Avgouleas made these remarks last month Speaking to Crypto Briefing. The legal expert declared that regulators have failed in their attempts to try to use the existing legal framework to govern digital tokens. Although the Law Professor believes some crypto tokens could be legitimately classified as securities, but none of them especially Bitcoin (BTC) can meet the current definition of what a commodity is.
The Legal Status Of Bitcoin
It is just one year ago since CME launched their BTC futures contracts. Immediately the news came to light Bitcoin (BTC) surged up to record its highest ever valuation at $20,000. Futures contracts are basically agreements made between parties to exchange commodities (including Bitcoin) at a particular time and specific price.
Originally designed to serve as a means of creating artificially stable prices in the agricultural sector, they are used by speculators to place bets on what the future will be for digital asset’s in terms of pricing and valuation. In March 2018 the A U.S. judge ruled that BTC could be regarded as a commodity. This news came three months after Cboe had also introduced its Bitcoin futures. Whether Bitcoin should truly be regarded as a commodity is debatable despite the court ruling.
United States SEC Has Vowed To Treat Digital Assets As Securities
The debate regarding the regulatory process in America has centered on the topic of whether cryptocurrencies, especially coins sold out in the ICO boom, should be classified as securities.
The United States Securities and Exchange Commission had previously warned projects last year that it would regard new ICOs as securities. This November the SEC issued its first order against two projects, including Airfox and Paragon, to refund investors. Things may become more complicated. Because at the end of the past week, two Congressmen proposed a new bill outlining plans to exclude digital currencies from securities classifications.
Is it Right To Classify Bitcoin (BTC) As A Commodity?
People acquire digital tokens like Ethereum (ETH) or Cardano (ADA), because these options offer access to unique services that would normally be unavailable; such as paying ‘gas’ fees for dApps. These utility tokens are not purchased because of the possibility of future returns in a startup or project. Avgouleas believes that BTC shares similar characteristics as the tokens mentioned here.
Hence, based on his view, they shouldn’t be classed as commodities. Virtual assets have specific characteristics that makes it difficult to classify them as securities or as a commodity. Avgouleas urges regulators to recognize this proposition. According to him tokens must become their own asset class with their own private legal framework; giving institutional investors the certainty they need to enter the sector.