The US Commodity Futures Trading Commission (CFTC) has classified Litecoin, Bitcoin, and Ethereum as commodities under its jurisdiction, in a significant move that recognizes the role of cryptocurrencies in financial markets. This classification by the CFTC provides greater regulatory clarity for these digital assets and may have implications for their future trading, regulation, and taxation.
The classification of Litecoin as a commodity, along with Bitcoin and Ethereum, is a significant development in the cryptocurrency industry. This means that the CFTC has jurisdiction over the trading of Litecoin futures and other derivative products. It also lends further legitimacy to Litecoin as a viable investment option for traders and investors. The classification could also lead to greater institutional adoption of Litecoin, as commodity status is often viewed as a sign of maturity in financial markets.
The crypto market bled more than $50 billion in market cap today after it was revealed that Binance and CEO Changpeng Zhao will face legal action from the United States Commodity Futures Trading Commission “over alleged trading and derivatives rules violations.”
According to the filing, the CFTC has explicitly named Litecoin, along with Bitcoin and Ethereum, to be a commodity under their jurisdiction. The CFTC is in charge of regulating commodity futures markets, such as oil, soy, corn, silver, and gold.
In the past, the CFTC has been clear that Bitcoin is a commodity and has also named Ether as such, allowing both to be traded on the Chicago Mercantile Exchange better known as CME.
But the SEC has recently muddied the regulatory clarity around ETH. LTC hasn’t been under scrutiny by the SEC, however, making this latest naming of Litecoin to be a commodity especially notable.
Why The Distinction Could Drive A New Digital Silver Narrative
The CFTC calling LTC a commodity comes at a time when there are more skeptics of crypto than ever before, yet the safer, commodity-like BTC has been thriving in the midst of a banking sector crisis.
In the past, during periods of economic distress, high inflation, or war, investors flock to the safety of precious metals like gold. Precious metals are commodities with an extremely scarce supply. Due to this attribute, silver and gold have been used as money throughout history.
The fiat system today exists because gold and silver were easy to counterfeit, and hard to transport and because governments had to keep minting new coins because humans found ways to shave down the metals or lower the actual metal content per coin.
Litecoin is now being labeled a commodity, and with investors fleeing from banks to BTC and gold, could we also see a flight to Litecoin and silver? And more importantly, could this reignite the digital silver narrative that propelled LTC to new highs in 2017?
Litecoin technicals have recently begun to teeter into bullish territory, even though altcoins have been struggling to keep up with Bitcoin. LTC being labeled a commodity officially by the CFTC, combined with a network growing faster than even Bitcoin’s is, Litecoin could see a dramatic change in sentiment in the near and long term.
Disclaimer: The information provided on this page does not constitute investment advice, financial advice, trading advice, or any other sort of advice and it should not be treated as such. This content is the opinion of a third party and this site does not recommend that any specific cryptocurrency should be bought, sold, or held, or that any crypto investment should be made. The Crypto market is high-risk, with high-risk and unproven projects. Readers should do their own research and consult a professional financial advisor before making any investment decisions.