Cryptocurrency is a digital token based on blockchain technology, which can be decentralized without the intervention of a third party such as the government or a financial institution. Cryptocurrency developers build their token system by raising funds through initial coin offerings (ICO). At present, the main problem with cryptocurrency ICO is that it cannot be clearly classified into the two traditional issuance classifications of securities or commodities. Both types of issuance have independent regulatory agencies: the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). The emergence of cryptocurrencies has exposed the divergence of financial market supervision plans under the administration of SEC and CFTC.

A boundary between securities and commodities is important for the classification of cryptocurrency. The investment contract test (Howey test) was first adopted in the SEC v. W.J. Howey Co. case. It establishes four standards to determine whether an agreement is an investment contract, and then whether it is a security. The test can distinguish between commodities and securities, but the novelty of cryptocurrencies blurs the line between them. If cryptocurrency is built on blockchain technology that provides sufficient utility, then it is just a commodity.