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US Commodity Futures Trading Commission Primer on Virtual Currencies [pdf]

83 points by thisisit 9y ago

fnwx17 9y ago
This reads more like an internal memo to the senior management of CFTC that don't even use a smartphone. Unfortunately it doesn't seem to offer any new information. Half of it reads like a typical"what is a cryptocurrency? pros and cons" article from LinkedIn.
JamalMolla 9y ago
Trading on Commodities is a huge challenge and to be successful at it we need to have sufficient knowledge. I am no master but with the kind of guidance I have got from fxbuzz.co.uk, it has made my work a lot easier to do. So, you too can follow me and become successful with their help.
LAMike 9y ago
"Only invest what you are willing and able to lose." Never thought I'd hear the government give positive/neutral investing advice on Bitcoin. I think all the agencies are going to fight to classify something they can control. Is it a commodity, property, stock, a digital gold or something else?
- josh2600 9y ago
  This is the advice that all agencies give regarding investments. In this regard there's nothing special about cryptocurrency. Re: regulation, so far it is property from a taxation perspective and either property or a security from a regulation perspective. Instruments on top are regulated as all derivative financial products are.
- dogruck 9y ago
  I wouldn't characterize the 20 slide deck as "neutral." Namely, 6 of the 20 slides warn about risks that can be summarized as "you have no recourse if something goes wrong." I think the primary publication motivation was to protect the CFTC. "Why didn't you say something?"
  - Sangermaine 9y ago
    >I wouldn't characterize the 20 slide deck as "neutral." Namely, 6 of the 20 slides warn about risks that can be summarized as "you have no recourse if something goes wrong." How is that not neutral? It's just stating simple fact.
    - dogruck 9y ago
      If the CFTC writes a report about, say, Corn Futures, they talk about what the rules are, and what you can do if you get scammed because a bad actor violates those rules. The CFTC might say, "you have the right to appeal a decision" yada yada. But here, they're just saying, effectively, "look, we warned you."
- deleted 9y ago
  [deleted]
thisisit 9y ago
"The CFTC first found that Bitcoin and other virtual currencies are properly defined as commodities in 2015." Never heard of this before. What are the implications of this on ICOs if any?
- iheartmemcache 9y ago
  (Not a CPA or tax attorney, consult your regionally certified folks for specifics. Just parroting what the IRS has published for consumer-consumption.) At the national level, the IRS declared Bitcoin pretty clearly in Notice 2014-21 for 2015 onwards as strictly a capital asset and not as a currency backed by a foreign nation state. Q/A #7 is the most pertinent. The implications on ICOs for an investor under the dominion of the IRS would be nearly nothing, as it's treated as a capital asset (valued upon purchase at FMV, and then again upon sale, once again, at FMV). Think of it like buying MSFT at $foo, selling at $bar, then paying capital gains on your gross less fees. Relevant publications are the 544 if you're trading, the 525 if you're mining. All service/product based income Bitcoin must be declared in a 1099-MISC. The last page is dedicated to a love-note saying "hey, so listen, you're 100% subject to the standard "failure to report (correctly or not) tax evasion penalties, so uh pay us". If you're offering an ICO yourself, things are going to get an order or two of magnitude more complicated, I'd imagine. No idea how it's classified but I'd imagine your regulatory reporting burdens will be somewhere between pink sheets and a publicly traded NYSE post-Sarbox company Edit: On second thought, it might be higher since you're very arguably operating a FinEx. "Know your customer" rules a la banking regulations might apply (i.e. filling out a SAR and filing with FinCEN). I'd definitely speak with a tax attorney who's worked on FINRA secondary market filings though.
  - KasianFranks 9y ago
    > If you're offering an ICO yourself, things are going to get an order or two of magnitude more complicated, I'd imagine. No idea how it's classified but I'd imagine your regulatory reporting burdens will be somewhere between pink sheets and a publicly traded NYSE post-Sarbox company. They are actually simpler, I know this from running an OTC for a few years. The blockchain keeps people far more honest and transparent than Stock Transfer Agents, IQCapital and DTCC combined. T

83 points by thisisit 9y ago

This reads more like an internal memo to the senior management of CFTC that don't even use a smartphone. Unfortunately it doesn't seem to offer any new information. Half of it reads like a typical"what is a cryptocurrency? pros and cons" article from LinkedIn.

JamalMolla 9y ago

Trading on Commodities is a huge challenge and to be successful at it we need to have sufficient knowledge. I am no master but with the kind of guidance I have got from fxbuzz.co.uk, it has made my work a lot easier to do. So, you too can follow me and become successful with their help.

LAMike 9y ago

"Only invest what you are willing and able to lose." Never thought I'd hear the government give positive/neutral investing advice on Bitcoin. I think all the agencies are going to fight to classify something they can control. Is it a commodity, property, stock, a digital gold or something else?

josh2600 9y ago
This is the advice that all agencies give regarding investments. In this regard there's nothing special about cryptocurrency. Re: regulation, so far it is property from a taxation perspective and either property or a security from a regulation perspective. Instruments on top are regulated as all derivative financial products are.
dogruck 9y ago
I wouldn't characterize the 20 slide deck as "neutral." Namely, 6 of the 20 slides warn about risks that can be summarized as "you have no recourse if something goes wrong." I think the primary publication motivation was to protect the CFTC. "Why didn't you say something?"
- Sangermaine 9y ago
  >I wouldn't characterize the 20 slide deck as "neutral." Namely, 6 of the 20 slides warn about risks that can be summarized as "you have no recourse if something goes wrong." How is that not neutral? It's just stating simple fact.
  - dogruck 9y ago
    If the CFTC writes a report about, say, Corn Futures, they talk about what the rules are, and what you can do if you get scammed because a bad actor violates those rules. The CFTC might say, "you have the right to appeal a decision" yada yada. But here, they're just saying, effectively, "look, we warned you."
deleted 9y ago
[deleted]

thisisit 9y ago

"The CFTC first found that Bitcoin and other virtual currencies are properly defined as commodities in 2015." Never heard of this before. What are the implications of this on ICOs if any?

iheartmemcache 9y ago
(Not a CPA or tax attorney, consult your regionally certified folks for specifics. Just parroting what the IRS has published for consumer-consumption.) At the national level, the IRS declared Bitcoin pretty clearly in Notice 2014-21 for 2015 onwards as strictly a capital asset and not as a currency backed by a foreign nation state. Q/A #7 is the most pertinent. The implications on ICOs for an investor under the dominion of the IRS would be nearly nothing, as it's treated as a capital asset (valued upon purchase at FMV, and then again upon sale, once again, at FMV). Think of it like buying MSFT at $foo, selling at $bar, then paying capital gains on your gross less fees. Relevant publications are the 544 if you're trading, the 525 if you're mining. All service/product based income Bitcoin must be declared in a 1099-MISC. The last page is dedicated to a love-note saying "hey, so listen, you're 100% subject to the standard "failure to report (correctly or not) tax evasion penalties, so uh pay us". If you're offering an ICO yourself, things are going to get an order or two of magnitude more complicated, I'd imagine. No idea how it's classified but I'd imagine your regulatory reporting burdens will be somewhere between pink sheets and a publicly traded NYSE post-Sarbox company Edit: On second thought, it might be higher since you're very arguably operating a FinEx. "Know your customer" rules a la banking regulations might apply (i.e. filling out a SAR and filing with FinCEN). I'd definitely speak with a tax attorney who's worked on FINRA secondary market filings though.
- KasianFranks 9y ago
  > If you're offering an ICO yourself, things are going to get an order or two of magnitude more complicated, I'd imagine. No idea how it's classified but I'd imagine your regulatory reporting burdens will be somewhere between pink sheets and a publicly traded NYSE post-Sarbox company. They are actually simpler, I know this from running an OTC for a few years. The blockchain keeps people far more honest and transparent than Stock Transfer Agents, IQCapital and DTCC combined. T