What Is the Difference between a Security and a Commodity in Crypto Regulation?
In US regulation, a commodity is a fungible good used to produce or exchange other goods, like Bitcoin and Ethereum (often considered commodities). A security is an investment contract that represents an investment of money in a common enterprise with the expectation of profit from the efforts of others (Howey Test).
Securities are subject to stringent registration and disclosure requirements, unlike commodities. The classification determines which regulatory body has jurisdiction.
Glossar
Expectation of Profit
Projection ⎊ Expectation of profit, within cryptocurrency options and derivatives, represents a probabilistic assessment of future gains derived from a specific trading strategy, factoring in underlying asset volatility and time decay.
Efforts of Others
Influence ⎊ Efforts of Others, within cryptocurrency and derivatives markets, represent the aggregate impact of participant actions beyond an individual trader’s direct control, fundamentally altering price discovery and risk profiles.
Investment of Money
Allocation ⎊ Investment of money within cryptocurrency, options trading, and financial derivatives represents a strategic deployment of capital predicated on anticipated risk-adjusted returns, differing substantially from traditional asset classes due to inherent volatility and regulatory uncertainty.