MSTR Cat

Crypto Law/Level I · What crypto is in law/1.2 The labels/Lesson 7

One token, several labels

Why the same coin can be property for tax, a commodity for one regulator, part of a securities offering for another and money for a licensing law, all at once, and how those labels change.

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. Choose the wrapper with the lightest tax label: spot coins self-custodied cost nothing to hold and gains over one year fall in the 2026 0% bracket up to $49,450 single; the catch is that sales and swaps are reported even without a broker.
  2. Spot crypto is property, not stock or securities, so the §1091 wash-sale rule does not currently apply, while shares of spot bitcoin funds are securities and do face it; H.R. 10357 would extend the rule to crypto, so check its status first.
  3. Regulated futures carry the §1256 label: 60/40 long- and short-term treatment regardless of holding period, reported on Form 6781; the price is annual mark-to-market tax on open positions at year-end.
  4. Build the free label table per token before acting, citing source and date: SEC and CFTC views can change, as the 17 March 2026 interpretation shows, but the IRS property label decides your tax whatever the regulators conclude.

MaterialsIRS Notice 2014-21 (virtual currency treated as property for federal tax)The SEC fact sheet on the joint SEC–CFTC interpretation of 17 March 2026 (Release 33-11412)The opinion in United States v. Harmon (D.D.C., 24 July 2020)A list of the tokens you hold or follow

Wonder

  1. How can bitcoin be property, a commodity and money at the same time?
  2. Can a token change labels over time, or from one country to another?
  3. When labels seem to conflict, who has the final word?

Explore

  1. The labels in this chapter belong to statutes, not to tokens. Each law defines its own words for its own purpose: tax law decides how gains are measured, commodities law polices trading markets, securities law governs fundraising from investors, and money-transmission law licenses businesses that move value for others. So “what is bitcoin?” is the wrong question. The useful question is “what is bitcoin for this particular law, in this country, in this transaction?” Holding several labels at once is normal, and it does not mean the law is confused; it means several laws apply to the same activity.
  2. Bitcoin shows how this works in the United States. For federal tax it is property, under IRS Notice 2014-21 (lesson 1.2.1). For the Commodity Futures Trading Commission it is a commodity, a position taken in 2015 and confirmed by courts (lesson 1.2.4). For criminal and licensing statutes it can be money: a federal court in New York said so in United States v. Faiella in 2014, and on 24 July 2020 a federal court in Washington, DC held in United States v. Harmon that bitcoin is money under the District’s Money Transmitters Act. It is still not legal tender in the US (lesson 1.2.2).
  3. The same token can also be treated differently depending on how it was sold. In the SEC’s case against Ripple, Judge Analisa Torres held on 13 July 2023 that Ripple’s sales of XRP to institutional buyers were investment contracts, while its programmatic sales on exchanges were not. A final judgment on 7 August 2024 imposed a civil penalty of $125,035,150, and both sides dropped their appeals in August 2025. Then, in March 2026, the SEC and CFTC listed XRP among their examples of digital commodities. One token, three different answers, each tied to a different transaction or moment (lesson 3.1.7).
  4. Labels can change over time. The SEC’s interpretation of 17 March 2026 explains that a token which is not itself a security can become subject to an investment contract when an issuer raises money with promises of essential managerial work, and stops being subject to it once those promises are fulfilled or clearly fail. Chairman Paul Atkins had previewed the idea in November 2025, saying investment contracts “can be performed and they can expire.” Statutes can relabel too: once the GENIUS Act takes effect, a payment stablecoin from a permitted issuer is neither a security nor a commodity under federal law (lesson 1.2.5).
  5. Labels also change at the border (lesson 1.1.4). England and Wales and Northern Ireland now confirm by statute that digital things can be personal property. El Salvador made bitcoin legal tender in 2021, then made private acceptance voluntary in 2025. The European Union’s MiCA regulation sorts tokens into its own classes, such as e-money tokens and asset-referenced tokens, which do not line up exactly with US categories (lesson 3.3.1). A person in one country dealing with a platform in another can be subject to more than one set of labels for the same coin, and level 8 compares the major markets.
  6. When labels collide, agencies give their views but courts decide disputes. Since Loper Bright Enterprises v. Raimondo, decided on 28 June 2024, US courts must use their own independent judgment about what a statute means rather than defer to an agency’s reading of an ambiguous law. Congress can also redraw the lines; the CLARITY Act, which passed the House in July 2025, was still pending in October 2026 (lesson 3.2.5). A practical exercise: for one token, make a small table of tax, securities, commodities, money transmission and country labels, and note the source and date for each entry.

Key facts

  • IRS Notice 2014-21 treats virtual currency as property for US federal tax purposes.
  • The CFTC first found that bitcoin and other virtual currencies are commodities in its September 2015 Coinflip order.
  • On 13 July 2023, Judge Analisa Torres held that Ripple’s institutional sales of XRP were investment contracts but its programmatic exchange sales were not.
  • The SEC interpretation of 17 March 2026, joined by the CFTC, explains how a crypto asset can become subject to, and later cease to be subject to, an investment contract.
  • In Loper Bright Enterprises v. Raimondo, decided on 28 June 2024, the Supreme Court overruled Chevron and held that courts must exercise independent judgment about what statutes mean.
  • Once the GENIUS Act takes effect, a payment stablecoin issued by a permitted issuer is excluded from the federal definitions of both “security” and “commodity”.

Exercise nine, six, three, one

9CollectList up to 9 legal labels that could apply to one token you hold or follow, such as property, commodity, security, investment contract, money, legal tender, stablecoin, collectible or e-money token.
6ClusterSort them into 6 categories: tax labels, securities labels, commodities labels, money and payment labels, labels from other countries, and labels you are unsure apply.
3DistillReduce the 6 categories to 3 groups: labels settled by a statute or court ruling, labels based on an agency’s current view, and labels that are still disputed or pending.
1CrystallizeWrite 1 sentence explaining, in your own words, why one token can carry several legal labels at the same time.

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