Bitcoin, virtual currency, commodity regulation, futures regulation


A decade has passed since Bitcoin solved a fundamental problem plaguing virtual currencies: How to ensure, without resort to financial intermediaries or other trusted central authorities, that a unit of digital currency can be spent only once. In that time, Bitcoin has inspired countless follow-on projects. Some have attempted to improve the technology’s potential use for digital cash, by, for example, increasing the number of transactions processed per second or improving user privacy. Others have strayed further from Bitcoin’s original intent, building on blockchain—Bitcoin’s central innovation—to enable distributed computing and so-called smart contracting, decentralized lending, governance, data storage, and digital collectibles, among others. At the same time, regulators and scholars have struggled to keep pace. A range of federal agencies has waded into the world of virtual currencies, often beginning by characterizing the assets as something recognizably within their authority (property, money, a commodity, a security, and so on). And much of the scholarly discourse has run along a parallel track, as scholars have wrestled with the basic question of how legally to classify these new assets. In focusing, alongside government agencies, on questions of classification, however, the scholarship has neglected an important aspect of the advent of virtual currencies: the way in which a regulator’s efforts to fit an utterly novel asset into a statutory definition so often not only define the asset but redefine the definition itself. The very uncertainty of a virtual currency’s classification—both legal and metaphysical—enables regulators not only to claim jurisdiction over that asset but also to reshape and broaden that jurisdiction. Enthusiasts and entrepreneurs have proposed numerous use cases for blockchain and virtual currencies. Federal regulators, without saying as much, have put forward their own.