Both the CFTC and SEC view bitcoin as a commodity for now, though

It’s a confusing time to be a crypto company. The markets are volatile and trading activity is shaky right now, but the biggest problem for crypto firms seems to be that there’s no clarity at the moment around the laws they’re supposed to be in alignment with.

Take, for instance, what the U.S. Commodity Futures and Trading Commission (CFTC) considers crypto to be: In its lawsuit against the crypto exchange Binance and its CEO, the CFTC alleged the firm violated trading and derivative rules, and referred to the two largest cryptocurrencies, bitcoin and ether, as commodities.

Per the CFTC’s filing against Binance, the regulator said certain digital assets, including bitcoin, ether, litecoin and “at least two fiat-backed stablecoins,” tether and the Binance USD, “as well as other virtual currencies as alleged herein, are ‘commodities.’”

The complaint also alleged that Binance and the respective parties charged “solicited and accepted orders, accepted property to margin and operated a facility for the trading of futures, options, swaps and leveraged retail commodity transactions involving digital assets that are commodities.”

This stance is “a significant issue if the same company [and] exchange is sued by multiple agencies for the same tokens,” Yankun Guo, partner at Chicago-based law firm Ice Miller, told TechCrunch+. “This stand is also a stark contrast to the position taken by the SEC and possibly weakens the SEC’s argument that the tokens are securities.”

The CFTC’s viewpoint diverges from another major U.S. government agency, the Securities and Exchange Commission (SEC), which views most crypto assets (aside from Bitcoin) as securities.

Earlier this month, SEC Chair Gary Gensler told Bloomberg that the crypto market, while smaller than capital markets, is “not necessarily compliant” compared to traditional finance.

At the SEC, there’s “one goal,” Gensler said: “For them to come into compliance. […] They can call themselves crypto exchanges or lending or staking as a service or other intermediaries. [Our goal is for them] to come into compliance and ensure that they don’t mislead the public or commingle the funds or take the publics’ funds and do things we don’t allow in our financial markets.”

Gensler compared it to how the SEC doesn’t allow the New York Stock Exchange to play with customers’ funds, make markets, run hedge funds or be in the clearing business. “We separate out those conflicts,” he added.

The CFTC and SEC did not immediately respond to requests for comment.

So are cryptocurrencies commodities or securities? Well, it depends on who you ask. As someone who’s been covering this space, I can empathize with firms offering crypto trading on this, as it feels wishy-washy. Almost like if your mom told you one thing, but your dad told you another. Who are you going to listen to?