Ever since the Cryptocurrencies catapulted to the forefront of the financial structure, they have been controversy's favourite child. Whether it is it's volatile nature, the involvement in dirty deeds or just how farcical or futuristic is the fabric of it. Out of all the issues revolving around it, the biggest enigma probably lies in the very essence of its categorization, whether it is a security or a commodity. The people in charge have not really helped the cause by the mumbo-jumbo statements loaded with the lack of clarity they have made, left people flabbergasted.

Securities refer to the buying of stocks, bonds, and shares in a company, private or government. The primary purpose behind investment in these by the investors is to safeguard a steady rate of return while reducing the risk of a financial loss.

The commodity Futures Trading Commission (CFTC) defines a commodity as an "an agricultural product or natural service resource, as opposed to a financial instrument such as a currency or interest rate".
<h2>Difference Between Security And Commodity</h2>
While they both share similarities In the way that they're both listed on the markets, and they both carry robust liquidity, enhancing the ease of exchanging, their governing bodies are different. The agency behind the framework of security is the U.S. securities and exchange commission, whereas the one creating the regulations for commodities is the commodity futures trading commission (CFTC). S.E.C.'s <a href="https://consumer.findlaw.com/securities-law/what-is-the-howey-test.html">Howey test </a> helps in defining that a transaction whether or not is an investment contract if "a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party,"
<h2>How Security and Commodity's Existing Definitions Influence Cryptocurrencies, Especially Bitcoin And Ethereum</h2>
While the definitions above paint a pretty clear picture, things turn a little ambiguous when we throw digital assets into the mix. The struggles of S.E.C., CFTC in implying the above mentioned in the field of cryptocurrencies are painfully conspicuous.
<h2>Bitcoin </h2>
It's safe to say that the top cryptocurrency has had its fair share of struggle. However, if 5there's one thing in which the king coin has had a little rub of the green, it is that in the eyes of most bitcoin is a versatile coin that can take the shape of whatever financial instrument the owner wants it to. The biggest reason people fear a coin taking the shape of security is that the added regulations of the S.E.C. that comes with it which can add complexities in the cryptocurrency. However, bitcoin decentralized fabric, transparency, versatility in being used as a commodity is elite class. The CFTC has time and time again mentioned that bitcoin is not a security asset, not by any means.

In October 2019, CFTC Chairman Heath Tarbert mentioned that they are in touch with the S.E.C. and both have reached the conclusion that bitcoin is a commodity. He stated.
<blockquote>"We've been very clear on bitcoin: bitcoin is a commodity. We haven't said anything about ether – until now."</blockquote>
<h2>The Curious Case of Ethereum Which Had it Harder </h2>
Ethereum's coin ether was surprisingly not that lucky and bore the brunt of these financial institutions on most occasions. Launched via an I.C.O. in 2014, the second-biggest cryptocurrency by market cap it initially showed signs that it should be labelled as a security. But while bitcoin was just a decentralized currency, Ethereum had more up his sleeve as it wanted to run a complete blockchain-based setup. 

While bitcoin took the financial game by the scruff of its neck, ethereum wanted to bring a revolution in the computational sector. However, the ethereum platform's fortune, which according to a <a href="https://smartereum.com/3681/90-of-the-mining-power-is-owned-by-16-miners-in-bitcoin-and-11-miners-in-ethereum-says-emin-gun-sirer-el33th4xor/">study</a> is more decentralized than bitcoin, took a turn for the better when the Sec and CFTC sorted it's security and commodity issue by stating that digital assets similar in nature should be treated similarly. Clayton said,
<blockquote>"A digital asset may be offered and sold initially as a security because it meets the definition of an investment contract, but that designation may change over time if the digital asset later is offered and sold in such a way that it will no longer meet that definition".</blockquote>
<h2>Bitcoin And Ethereum Commodities, Why Not Other Cryptocurrencies? </h2>
While the top two shares the privilege of being a commodity, the rest of the cryptocurrencies are still far away from achieving this position, their lack of decentralization, the initial coin offering procedure serve as a hurdle and halt their progress. Sec's Jay Clayton, In December 2017, issued a <a href="https://www.sec.gov/news/public-statement/statement-clayton-2017-12-11">statement</a> regarding the security and commodity conundrum. He highlighted that the I.C.O.s In the crypto space offer "substantially less investor protection than in our traditional securities markets, with correspondingly greater opportunities for fraud and manipulation". Ergo, an I.C.O. has to get registered under S.E.C. so that they can take the required security measures for the welfare of its investors.

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How Obscurity Around Security And Commodity Affects Cryptocurrencies

While Bitcoin and Etherem have gone past the ambiguity around security and commodity , other cryptocurrencies are still trying to find a way through.

Zain is a fervid fan of bitcoin and has been meticulously covering the field for a fair amount of time now. An aficionado of Spider man, Liverpool and Slim Shady.

How Obscurity Around Security And Commodity Affects Cryptocurrencies

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