MSTR Cat

Crypto Law/Level I · What crypto is in law/1.2 The labels/Lesson 4

Commodities

Why US law treats bitcoin and many other tokens as commodities, what the CFTC can and cannot do about it, and what is still being decided.

Education, not legal, tax or investment advice. Crypto law differs between countries and states and changes often. Check the current rules where you live with a qualified lawyer or tax adviser before you act.

The lean path

The cheapest, lowest-tax, simplest and most private route the law allows, best first. Each step names the rule it rests on and the condition that keeps it lawful.

  1. Spot coins held over one year qualify for the 2026 0% long-term rate up to $49,450 taxable income single, and the wash-sale rule does not currently reach them; the catch is that every sale or swap is still reported on Form 8949.
  2. Regulated bitcoin futures on CME are §1256 contracts: gains are taxed 60% long-term and 40% short-term whatever the holding period, and individuals may carry net losses back three years on Form 6781; the catch is yearly mark-to-market taxation of open positions.
  3. Holding a spot bitcoin exchange-traded product inside a Roth IRA lets gains grow tax-free; the 2026 contribution limit is $7,500 ($8,600 at 50 or over), Roth income limits apply, and early withdrawals of earnings can be taxed and penalised.
  4. Check any derivatives platform free on NFA BASIC before use; trading leverage or perpetuals on unregistered offshore venues gives no CFTC protection, and disputes with registered firms can use CFTC reparations from a $50 filing fee.

MaterialsThe definition of “commodity” in the Commodity Exchange Act, 7 U.S.C. §1a(9) (on law.cornell.edu)CFTC press release of 17 September 2015 on the Coinflip orderThe SEC fact sheet on the joint SEC–CFTC interpretation of 17 March 2026The NFA BASIC search page, which shows whether a firm is registered with the CFTC

Wonder

  1. How can a digital token be a commodity in the same way as wheat or oil?
  2. If bitcoin is a commodity, who supervises the platforms where people buy it?
  3. Does the commodity label protect buyers as much as the securities label does?

Explore

  1. In everyday speech a commodity is a raw material such as grain or oil. US law uses a far wider definition. The Commodity Exchange Act lists farm products, then adds “all other goods and articles, except onions” and motion picture box office receipts, and “all services, rights, and interests” in which contracts for future delivery are or will be traded. A “future” is a contract to buy or sell something at a set price on a later date. Because the definition is so broad, almost anything that futures are traded on can be a commodity. The regulator is the Commodity Futures Trading Commission (CFTC), introduced in lesson 1.3.2.
  2. The CFTC first applied that definition to crypto on 17 September 2015, in an order against Coinflip, Inc., which did business as Derivabit, and its chief executive. The order found that “Bitcoin and other virtual currencies are properly defined as commodities.” On 1 December 2017 the exchanges CME and CFE self-certified bitcoin futures contracts, which put regulated bitcoin futures on US exchanges. The CFTC chairman warned at the time that the underlying bitcoin “cash markets,” where coins themselves change hands, “remain largely unregulated”. That gap, between regulated futures and lightly supervised spot trading, is the main theme of this lesson.
  3. Courts have agreed with the commodity label. In 2018, in a CFTC case about a scheme called My Big Coin, Senior Judge Rya Zobel of the federal court in Massachusetts held that virtual currencies are commodities under the Act. She reasoned that because futures trading in virtual currencies, specifically bitcoin, exists, virtual currencies fall within the broad definition. The defendants were accused of taking more than $6 million from customers through false claims, including that the coin was backed by gold. The ruling confirmed that the CFTC’s anti-fraud power reaches schemes built around virtual currencies, not only regulated futures markets.
  4. The commodity label brings fewer up-front protections than the securities label. For futures, options and swaps the CFTC registers and supervises the exchanges and the firms that deal with customers. In the spot market, where people buy and sell coins for immediate delivery, its main tools have been enforcement against fraud and manipulation after the fact. There is no federal prospectus for a commodity and no federal registration of ordinary spot crypto exchanges as such; state money-transmitter licences fill part of the gap (lessons 1.3.6 and 5.2.2). A practical check: search a firm’s name in NFA BASIC to see whether it holds any CFTC registration.
  5. The agencies drew the line more sharply in 2026. The SEC’s interpretation of 17 March 2026, which the CFTC joined, says certain crypto assets that are not securities could meet the definition of “commodity” under the Act, and it lists examples of “digital commodities”, including bitcoin, ether, solana, XRP and dogecoin. On 5 October 2026, under Chairman Michael Selig, the CFTC sought public comment on an advance notice of proposed rulemaking about retail crypto transactions and a new category of crypto asset markets on regulated exchanges. An advance notice is an early step in rulemaking, not a rule.
  6. The bigger change depends on Congress. The CLARITY Act passed the House of Representatives on 17 July 2025 by 294 votes to 134. As passed by the House, it would give the CFTC exclusive jurisdiction over spot trading in “digital commodities” on registered platforms and create registration for digital commodity exchanges, brokers and dealers. The Senate Banking Committee reported an amended version on 1 June 2026, but the bill had not become law as of October 2026 (lesson 3.2.5). Separately, the GENIUS Act removes payment stablecoins issued by permitted issuers from the definition of commodity (lesson 1.2.5).

Key facts

  • The Commodity Exchange Act defines “commodity” to include all goods, articles, services, rights and interests in which futures contracts are or will be dealt in, except onions and motion picture box office receipts.
  • In a 17 September 2015 order against Coinflip, Inc., the CFTC found that bitcoin and other virtual currencies are properly defined as commodities.
  • CME and CFE self-certified bitcoin futures contracts on 1 December 2017.
  • In the 2018 My Big Coin case, a federal judge in Massachusetts held that virtual currencies are commodities under the Commodity Exchange Act.
  • The SEC interpretation of 17 March 2026, joined by the CFTC, lists bitcoin, ether, solana and XRP among examples of digital commodities.
  • The CLARITY Act passed the House on 17 July 2025 by 294 votes to 134 but had not become law as of October 2026.

Exercise nine, six, three, one

9CollectList up to 9 places or products through which people get exposure to bitcoin or another token, such as a spot exchange, a futures contract, an exchange-traded fund, a crypto ATM, a lending app or a self-custody wallet.
6ClusterSort them into 6 categories: spot trading, futures and other derivatives, funds, payment or transfer services, lending or yield products, and products you cannot classify.
3DistillReduce the 6 categories to 3 groups: products clearly supervised by the CFTC or SEC, products mainly covered by state licences or after-the-fact enforcement, and products whose regulator you would need to check.
1CrystallizeWrite 1 sentence explaining, in your own words, what calling a token a “commodity” does and does not do for a buyer in the United States.

Fact check

Dates, figures and claims checked against the published sources listed below.

Open in the interactive academy →

PT ES ZH JA KO RU DE FR MS