Just three days ago, the Securities and Exchange Commission and the Commodity Futures Trading Commission finally gave an answer to the long-standing question of whether Bitcoin is a security or a commodity?
The answer is it is a commodity, and while this might not seem to be too different to you and me who use Bitcoin regularly whether by buying, trading or using it on a day to day basis it actually has many major benefits when looking into it more closely.
For a very long time Bitcoin was very uncertain regulatory wise and this is one of the main concerns both for institutions and individual investors. The question in the back of everyone's minds was what will happen if it is deemed a security as such a decision could have lead to a tightening on exchanges and transactions and on how companies deal with Bitcoin.
With the decision out the way the uncertainty has now been taken away, this alone is one of the major advantages for the asset as it now moves with clearer direction.
This also allows institutions to start moving into the asset, as they often have strict guidelines that need to be clear about the regulation on any asset before they will move into it. Pension funds, asset managers and insurance companies are all likely to start investing more into Bitcoin now as it is now similar to an asset like Gold and is much more accessible to them as a result.
This is only likely to become more common in the future with more money flowing into the asset and should see an improvement in the overall market and stability.
It also really makes much more sense when comparing it to how it actually works. There is no one company in control of Bitcoin or a particular authority and it is no longer seen to be a system that is not relying on a group of people. It is placed within the category it should be alongside other assets that perform similarly and don't rely on a specific group to control its value.
Custody is also another side to the whole picture that will now benefit because with a security classification the finance companies who wanted to give custody would now be able to do so. As it has now been defined as a commodity, they can operate under the current system with much more certainty and see this also help in with regards to offering custody of Bitcoin to the customer, with much less concern in regards to security etc.
The mining of Bitcoins is also now also set to see a difference as at times before, and there had been a level of concern about the mining process perhaps being related to securities with this new ruling now, it seems that mining has now clearly become defined as a form of production, not as an investment like gold and thus this will reduce worry and also give certainty.
Even though this decision will not appear to affect you and me using Bitcoin on a day-to-day basis, the overall change is likely to be very significant when it comes to reducing major regulatory uncertainty, freeing up the institutional investment and correctly defining Bitcoin.
This is a very positive outcome I think, although the results will perhaps not be noticeable right away and could be seen as one of the major moves in the future of Bitcoin.