David Schwartz, Ripple CTO Emeritus, recently weighed in on a social media discussion about what legally qualifies as a commodity versus a security. The debate began when a user questioned how insider trading charges could apply on Polymarket, arguing that if the platform does not sell securities, insider trading laws might not be relevant. Another user countered by pointing out that insider trading rules also apply to commodities.
In response, Schwartz cited the legal definition from 7 USC 1a(9), stating: 'This qualifies as a right or interest to a future delivery because it is a conditional entitlement to a particular quantity of a particular good in the future traded on an exchange pursuant to a standardized contract.' He thus argued that certain assets traded on platforms like Polymarket could indeed fall under the commodity umbrella, bringing them under the jurisdiction of the Commodity Futures Trading Commission (CFTC).
The distinction between commodities and securities remains critical in the crypto space because it determines which regulatory agency oversees trading—the SEC for securities, the CFTC for commodities. In March 2026, the SEC, joined by the CFTC, issued a joint interpretation clarifying that most crypto assets are not securities themselves, ending over a decade of uncertainty about how federal securities laws apply to digital assets.
