Cryptocurrencies should be Regulated like FX

... not like securities (except in special cases), and definitely not like commodities.

The contemporary debate is about which US regulator gets to go after crypto. Here are some (hopefully) clarifying arguments.

1. All of securities, national currencies, commodities, and crypto currencies are generally regarded as assets.

2. The valuation of an asset, depends on the asset's relationship with its underliers.

2.1. SECURITIES : are most tightly coupled to their underliers, via legal regulators, generally these are national regulators. Examples : stocks, bonds. They are semantic.

2.2. COMMODITIES : are their own underliers (or may be regarded as non-semantic by definition). Examples : gold, timber.

In between these extremes, we have ...

2.3. NATIONAL CURRENCIES : are firstly, semantic, but secondly, they are less loosely coupled to their underliers (governments), than SECURITIES as exampled above. One might regard them as a variety of securities which have a logically higher-order than the securities exampled above, since the ones above are defined in terms of these!

Where lie on this ... "spectrum" ... cryptos?

2.4. CRYPTO CURRENCIES : I believe, share the most similar political relationship to NATIONAL CURRENCIES. Cryptographic currency tokens are not inherently valuable like COMMODITIES, however their value lies in being controlled by some sort of GOVERNMENT SYSTEM. It just so happens that these governments are not national governments, but abstract protocols and decentralised communities, or specific companies ... each of which function like LITTLE CENTRAL BANKS. 

3. Therefore the question of whether crypto should be regulated as a security or as a commodity, is mainly bunk. Crypto should be regulated like FX.

If nationX chooses to raise funds by selling Xdollars for USD, we do not say, "nationX is selling securities", rather we say, "nationX is selling fiat". Cryptos are fiat - they have always been fiat. This fact has been regularly obscured by the notion that "crypto is a substitute for fiat", which is false ... rather, it is the case that "crypto currency issuer governments, are substitutes for national currency issuer governments".

Update :

4. Since in the US, the CFTC (and voluntarily, the NFA) regulates FX derivatives, there might be some confusion thereafter about whether the same body regulates assets which are uncontroversially commodities, and crypto assets whose classification remains controversial. Also OFAC.

5. The special cases in which crypto assets should be regulated as securities, is when such assets are tied to contracts (in general, and not to confused with "smart contracts") beyond the rudimentary function as exchangeable, governed, stores of value.