Is Bitcoin A Security Or Commodity?

TABLE OF CONTENTS1. Why Bitcoin’s Classification Matters 2. Understanding Security Vs. Commodity 3. U.S. Regulatory Perspectives On Bitcoin 4. Global Regulatory Viewpoints 5. Why Bitcoin Could Be Considered A Commodity 6. Arguments For Bitcoin Being A Security 7. Implications of Bitcoin Being a Commodity 8. Implications Of Bitcoin Being A Security 9. Expert Opinions And Market Sentiment 10. Frequently Asked Questions (FAQs) Understanding the difference between securities and commodities helps clarify how the CFTC, SEC and IRS view bitcoin.Getty ImagesBitcoin is one of the most widely recognized digital assets in the world, but its legal classification remains a topic of continued debate. In the United States, the Commodity Futures Trading Commission (CFTC) has classified bitcoin as a commodity since 2015. As digital assets become more integrated into traditional finance, questions persist about whether bitcoin fits best within commodity or securities laws.

This article explains the legal definitions of securities and commodities, outlines how U.S. and global regulators approach bitcoin, and explores the implications for investors, exchanges and policymakers. It also presents key arguments on both sides of the classification debate and discusses why bitcoin’s regulatory status matters for its long-term role in financial markets.

Why Bitcoin’s Classification Matters

Widely traded and globally recognized, bitcoin occupies a unique space in financial markets. Under the Commodity Exchange Act, it has been treated as a commodity since 2015, placing it within the legal framework that governs commodities trading.

Still, as digital assets evolve and regulatory frameworks shift, questions persist. This article explores Bitcoin’s current classification, the difference between securities and commodities and why the distinction matters for regulators, investors and institutions.

Understanding Security Vs. Commodity

Clarifying the difference between a security and a commodity is fundamental to understanding how digital assets like bitcoin are regulated. A security is typically defined as a financial instrument representing an investment of money in a common enterprise, with the expectation of profit primarily from the efforts of others. A commodity refers to a basic good or asset that can be bought, sold or traded and is generally interchangeable with other goods of the same type. This section outlines the legal definitions and regulatory implications of each classification.

MORE FOR YOU### What Is A Security?

A security is a legal and financial instrument that represents ownership, debt or the right to participate in the profits or governance of an entity. It includes a broad range of assets such as stocks, bonds, options, derivatives and investment contracts. An asset does not need to be publicly traded to be considered a security.

What matters is whether it involves an investment of money in a common enterprise with the expectation of profit from the efforts of others, as outlined in the Howey Test, a case decided by the Supreme Court in 1946. If an asset meets this definition, it falls under federal and state securities laws and is subject to oversight by the U.S. Securities and Exchange Commission, including disclosure and anti-fraud requirements.

What Is A Commodity?

Goods such as oil, gold, wheat and natural gas are considered commodities. These are standardized resources that are uniform in quality and interchangeable, making them essential to global trade and investment. In the United States, commodity trading is regulated by the Commodity Exchange Act, a federal law enacted in 1936 that established the legal foundation for the CFTC. Because commodity prices are driven by supply and demand, they are a key component in portfolio diversification, risk management and broader economic activity.

U.S. Regulatory Perspectives On Bitcoin

Bitcoin occupies a unique position in the U.S. regulatory landscape, with different agencies applying distinct classifications based on their legal mandates. While the CFTC views bitcoin as a commodity, the SEC does not consider it a security. The Internal Revenue Service treats it as property for tax purposes. The following section outlines how each agency approaches bitcoin and what their classifications mean for investors and market participants.

The CFTC’s Position

The CFTC classifies bitcoin as a commodity under the Commodity Exchange Act, giving the agency authority when bitcoin is used in derivatives contracts or when fraud or manipulation occurs in interstate commerce. The CFTC emphasizes that while virtual currencies can function as a medium of exchange or store of value, they present risks such as cybersecurity vulnerabilities, fraud and market speculation, especially in the absence of broader regulatory oversight.

The SEC’s Stance

The SEC has stated that bitcoin is not a security, aligning with the CFTC’s view. In 2025, under Chairman Paul S. Atkins, the SEC launched “Project Crypto” to modernize securities regulations and better accommodate digital asset innovation. While the SEC maintains that some crypto assets may meet the legal definition of a security under the Howey Test, it has committed to developing clear guidelines to help market participants understand which assets fall under securities laws. The goal is to promote responsible capital formation, ensure investor protection and support domestic innovation without applying outdated rules to modern technologies.

IRS Tax Treatment

The Internal Revenue Service approaches bitcoin from a tax perspective. For federal tax purposes, bitcoin is treated as property rather than currency. This classification means that buying, selling or exchanging Bitcoin may result in taxable capital gains or losses, depending on how the asset’s value has changed. Individuals and businesses are required to report these actions in compliance with property tax rules. The IRS treatment of bitcoin highlights the importance of accurate recordkeeping and reporting for anyone engaging in digital asset transactions.

Global Regulatory Viewpoints

Around the world, governments are taking diverse approaches to regulating bitcoin and the broader digital asset sector. In 2023, the European Union moved forward with the Markets in Crypto-Assets regulation, or MiCA, which sets clear requirements for transparency, supervision and consumer protection. In Asia, regulatory attitudes vary, with some countries embracing innovation and others tightening oversight in response to market volatility and geopolitical tensions. Meanwhile, jurisdictions like Australia have clarified that crypto assets, not specifically bitcoin, are not legal tender but are treated as taxable property, with gains and staking rewards subject to capital gains and income tax.

Why Bitcoin Could Be Considered A Commodity

Several core characteristics support the view that bitcoin functions as a commodity within financial markets. First, it operates without a central issuer, meaning no single entity controls its production, distribution or monetary policy. Second, bitcoin is widely viewed and used as a store of value, much like gold, particularly in times of economic uncertainty. Third, it is traded on commodity markets and futures exchanges, where its price is determined by market supply and demand rather than the actions of a company or issuer. Together, these features align bitcoin with traditional commodities and help explain why U.S. regulators, including the CFTC, have classified it as such.

Arguments For Bitcoin Being A Security

While U.S. regulators have classified bitcoin as a commodity, some authorities have raised concerns about whether it could meet the definition of a security. As former SEC Chair Gary Gensler has stated, within the realm of crypto, “everything but bitcoin” could be considered a security, implying that bitcoin’s decentralized structure might place it outside the typical Howey Test framework. Meanwhile, legal analysts and investor protection advocates have speculated that bitcoin-holder behavior, namely purchasing with the “expectation of profits,” could align with key prongs of the Howey Test.

Implications of Bitcoin Being a Commodity

Bitcoin’s classification as a commodity places it under the oversight of the CFTC, not the SEC. As a result, it is not subject to securities laws requiring issuer disclosures or registration. This affects how exchanges operate and reduces regulatory burdens compared to securities platforms. For investors, the designation allows access to regulated futures markets but provides fewer built-in protections than securities frameworks.

Implications Of Bitcoin Being A Security

If Bitcoin were to be classified as a security, it would fall under the jurisdiction of the SEC and become subject to federal securities laws. This would potentially introduce additional compliance requirements, such as registration and disclosure obligations for users involved in trading or facilitating transactions. Exchanges might need to adjust their operations to meet regulatory standards. Such a shift could lead to changes in market access, trading practices and investor participation. It may also influence how financial products involving bitcoin are structured and offered, with potential effects on liquidity, innovation and overall market dynamics.

Expert Opinions And Market Sentiment

Industry opinions on bitcoin’s classification and value vary widely, reflecting the broader debate around its role in the financial system. After the SEC approved spot bitcoin ETFs in January 2024, ARK Invest CEO Cathie Wood criticized former SEC Chair Gary Gensler’s dismissive tone, calling it “par for the course” of the skepticism that often accompanies disruptive technologies. Others emphasize bitcoin’s technological significance. “Bitcoin is a remarkable cryptographic achievement, and the ability to create something that is not duplicable in the digital world has enormous value,” said Eric Schmidt, former CEO of Google.

In contrast, JPMorgan Chase CEO Jamie Dimon has remained openly critical, stating, “I personally think bitcoin is worthless.” These divergent views highlight the lack of consensus among financial leaders and underscore the importance of clear regulatory frameworks as bitcoin’s role continues to develop.

Bottom Line

Bitcoin’s legal identity plays a critical role in how it is regulated, traded and adopted within the financial system. It is currently treated as a commodity under U.S. law, supported by its decentralized design, use as a store of value and active trading on commodity markets. At the same time, its speculative appeal and investment-driven use continue to raise questions about whether some features align more closely with securities.

Understanding the difference between securities and commodities helps clarify how the CFTC, SEC and IRS view bitcoin. As regulatory frameworks evolve, legal clarity will shape how bitcoin is taxed, accessed by investors and integrated into the broader economy. Ongoing policy developments will remain central to its future role in global markets.

Frequently Asked Questions (FAQs)

Is Bitcoin Legally A Commodity?

Yes, the CFTC classified bitcoin as a commodity in 2015 under the Commodity Exchange Act.

Has The SEC Ever Called Bitcoin A Security?

No, the SEC has consistently stated that bitcoin is not a security. The SEC’s position aligns with the CFTC’s classification of bitcoin as a commodity.

Does Bitcoin’s Classification Change In Other Countries?

Yes, bitcoin’s classification varies by jurisdiction.

Why Does The Classification Matter For Investors?

Bitcoin’s classification determines which regulations apply, affecting how it is traded, taxed and protected under the law. It also influences the level of oversight, investor protections, and access to financial products.