The application of bitcoin and blockchain technology allows companies to track the movement of goods and commodities on their supply chains through its various nodes. As a result, it helps streamline processes while minimizing costs. You can learn more about bitcoin trading by checking at this site.
In December 2021, the United States classified bitcoin as a commodity. The Federal Trade Commission (FTC) and Commodity Futures Trading Commission (CFTC) issued a joint statement on December 6, which suggested that cryptocurrencies like bitcoin qualify as commodities. The agencies tabled this decision from 2016 until the end of 2021. However, the recent crypto boom has pushed the FEC and CFTC to decide in 2018.Christopher Giancarlo, Chairman of the CFTC, when announcing his commission’s proposal he correspondingly suggested . Let’s discuss United States’ decision about classifying bitcoin as a commodity.
How is bitcoin classified as a commodity?
The CFTC and FTC have determined that certain types of existing products and services qualify as commodities or derivatives based on the CFTC’s authority over swaps, options and futures contracts markets; the FTC’s authority over “swaps” as defined under federal securities laws; and other federal laws governing these markets. These rules also seek to address fraud, market manipulation, system integrity and robustness, clearing obligations, price discovery and other core principles underlying derivatives regulation regarding cryptocurrencies.
Bitcoin is classified as a commodity in the United States because of the following reasons:
- Bitcoin is mined and recorded on a public ledger.
- Bitcoin is traded across international borders.
- Bitcoin transactions are irreversible, unlike traditional transactions in the financial world.
- Blockchain technology is applied in cryptocurrency processing.
- Bitcoin is decentralized and accessed by individuals worldwide from any corner of the globe.
- There are multiple software applications linked to bitcoin, such as wallet, exchange, news platform etc., for purchasing goods or services anywhere around the world instantly and inexpensively without any restrictions or fees imposed by banks, governments or corporations of the traditional banking system
Canada and Australia also classify bitcoin as a commodity:
The government of Canada has also indicated that bitcoin and other cryptocurrencies will be regulated as commodities in the country. “We can see the emergence of a parallel financial system based on cryptocurrencies,” said an official in the central bank of Canada.
In Australia, cryptocurrencies are treated as money and must abide by Australian foreign exchange regulations. However, according to a spokesperson from the Australian Tax Office, bitcoin is as good as money in taxation laws. In addition, all transactions made with cryptocurrency are classified as barter trade, meaning that all gains generated by investors are taxable under GST laws.
Bitcoin is revolutionizing the global supply chain as a commodity:
By classifying bitcoin as a commodity, the United States is pushing for cryptocurrency further to revolutionize the supply chain of goods and commodities. In addition, it is a significant step toward making bitcoin more institutional in the global market.
The decision made by the U.S., Canada and Australia can effectively expand the reach of bitcoin on a global scale. More businesses are opening their doors to accept cryptocurrencies as payment options due to this worldwide recognition by regulatory agencies.
Bitcoin can now be treated as an asset and an investment commodity, increasing its popularity in online trading markets worldwide while helping companies save millions annually from supply chain processes using blockchain technology.
Revolution in a supply chain with blockchain:
Blockchain technology can help revolutionize various supply chain processes. The transparency of this technology will help companies within a given industry to trace the origins of their products and identify if there is any damage or defect. It will further help cut costs and increase efficiency the same.
Companies and individuals can now access data on the blockchain network to trace all travels a product goes through and view which entities hold information regarding these products and what they contain. With this technology, companies can identify if there is any defect or damage in the goods and create a digital map of its journey from origin to destination, which may be less costly than previously obtaining a physical map from suppliers.
Blockchain technology can also help cut down on the costs of transporting goods and commodities. In addition, companies can track all shipments using a blockchain network and know where each item is located in the supply chain network. That way, operators of these supply chains will be able to monitor the activities and location of each product or commodity throughout its circulation.