In the Midst of Bankruptcy: How Cryptocurrency’s Classification Affects Creditors Who Were Once Customers

Abstract: In 2022, Congress proposed the Digital Commodities Consumer Protection Act to amend the Commodity Exchange Act and define a new type of commodity: digital commodity. The definition of digital commodity encompasses cryptocurrency and provides the Commodity Futures Trading Commission with jurisdiction over digital asset transactions. This definition of digital commodity has two important implications. First, it signals the lawmakers’ tendency to generalize cryptocurrency as a commodity. Second, it brings complications into how creditors—especially individual crypto account holders—can recover in the recent bankruptcy cases involving prominent crypto companies. This Comment contains four components. First, it provides a brief explanation of cryptocurrency and its underlying mechanism. Second, it reviews the debate over cryptocurrency’s classification as a commodity versus as a security. Third, it presents an overview of the bankruptcy system and the effect of a bankruptcy discharge. Finally, this Comment argues that generalizing cryptocurrency as a commodity limits the ability of creditors—especially cryptocurrency account holders, who are often individual consumers—to seek recovery outside of bankruptcy. This Comment aims to bring the interests of consumer creditors to the attention of judicial and legislative bodies.