Issues Pertinent to Cryptocurrency Regulation Explored in Article by Analysis Group Consultants

September 18, 2018

There are now more than 1,800 cryptocurrencies traded on platforms across the world, with a total market capitalization of more than $350 billion. A focus on the soaring value of these digital assets, though, can sometimes obscure the fact that a cryptocurrency (or token) is defined by a set of computer code designed to fulfill a particular function. As Analysis Group Vice President Sumon Mazumdar and Manager Seoyoung Kim point out in a new article for the American Bar Association's Litigation News, determining a cryptocurrency's function is key to answering the important question of how it should be regulated.

Mazumdar and Kim begin their article, “Cryptocurrencies Demystified and the SEC's Regulatory Stance,” by describing the distributed ledger technology common to all cryptocurrencies. They then investigate the functions that tokens can have and how these functions can evolve over time. These considerations are critical to deciding whether to treat a cryptocurrency as a security, subject to regulation in the US by the Securities and Exchange Commission (SEC), or as a commodity, subject to regulation by the Commodity Futures Trading Commission (CFTC). The authors conclude by explaining the SEC's views on this topic, which have recently garnered significant attention.

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