US derivatives regulators brought their first case against a Bitcoin trading platform on Thursday, declaring that virtual currencies are deemed “commodities” covered under existing law.
What’s going on? As it turns out, the CFTC recently settled charges with a bitcoin shop that allowed investors (gamblers?) to trade options on bitcoin.
Bitcoin is now classified as a commodity in the USA along with gold, oil and pork bellies, according to the Commodity Futures Trading Commission.
Here’s what the CFTC wrote about bitcoin as a part of its order and settlement with bitcoin firm Coinflip Inc. and its chief executive.
To be more specific, Derivabit was operating for the goal of trading or processing commodity options without first complying with the Regulations set forth by both the CEA and CFTC. It also gives established traders, who have CFTC regulations tattooed on the inside of their eyelids, a bit of an advantage as the market for virtual currencies mature.
The Order requires Coinflip and Riordan to cease and desist from further violations of the CEA and Regulations, as charged, and to comply with specified undertakings. The CFTC will be able to bring charges against wrongdoers and companies wanting to operate a trading platform for bitcoin must register.
However, others believe that the ruling is a positive step forward as it provides new businesses with a clear picture of where they fit in with U.S. regulators. Operators of bitcoin exchanges must be registered as a Designated Contract Market or Swap Execution Facility under Section 4c of the Commodity Exchange Act.
Awarding the status of commodity to the bitcoin means that it will get easier to trade in the digital currency and at the same time clean up the trading surrounding the product.
Meanwhile, the Commonwealth Bank of Australia (CBA) along with banks worldwide, including Barclays and the Royal Bank of Scotland, was looking the potential use of bitcoin technologies to drive global finance and create secure online payment services.