Crypto glossary
Digital commodity
A digital commodity is a crypto-asset classified as a commodity rather than a security under US law, placing it mainly under CFTC rather than SEC oversight.
US law treats commodities and securities very differently. The CFTC has long held that bitcoin and other virtual currencies are commodities under the Commodity Exchange Act, a view a federal court upheld in 2018. That gives the CFTC authority over crypto futures and over fraud and manipulation in spot markets, while securities, such as investment contracts identified by the Howey test, fall under the SEC.
The term digital commodity gained a formal meaning through market structure bills such as FIT21 and the CLARITY Act, which define it as a digital asset whose value is intrinsically linked to the use of a blockchain system and set conditions under which tokens can qualify. Under those proposals, the CFTC would gain direct authority to register and supervise spot exchanges trading digital commodities.
Classification matters because securities status brings registration, disclosure and trading restrictions that most token projects cannot meet. Bitcoin is widely accepted as a commodity and US regulators have treated ether the same way, but the status of most other tokens has depended on the facts of each case.
Example
Because bitcoin is treated as a commodity, US exchanges list BTC futures under CFTC rules, while a token sold to investors with promises of profit from a company's efforts could be deemed a security.