Former CFTC commissioner Bart Chilton was vocal is his opinion that the CFTC would consider derivatives on bitcoin under the regulator’s jurisdiction, after publically stating this in May 2013, so the decision has not sent shockwaves through the market. COIN, if approved, could be the first bitcoin ETF in the market.
“In this order, the CFTC for the first time finds that Bitcoin and other virtual currencies are properly defined as commodities”, notes the CFTC press release.
The Commodity Futures Trading Commission (CFTC) looking to shackle cryptocurrency currency traders and traders in derivatives of Bitcoin has ruled that it now be treated no differently than those trading in pork bellies, oil or gold.
The reports also claim that Coinflip which was operating an online platform known as Derivabit to help match up buyers and sellers with Bitcoin options came to observation quite early; however, the authorities were looking for the right moment to take any action.
“Having said that I’d rather Bitcoin were regulated as a commodity because commodity regulations are the lightest”. “While there is a lot of excitement surrounding bitcoin and other virtual currencies, innovation does not excuse those acting in this space from following the same rules applicable to all participants in the commodity derivatives markets”, said CFTC director of enforcement Aitan Goelman.
Second, the CFTC distinguished – with particularity – virtual currencies from “real” currencies, which it defined as “coin and paper money of [a sovereign state] … that are designated as legal tender, circulate, and are customarily used and accepted as a medium of exchange in the country of issuance”. Later snapshots just said “Not now Accepting Customers”, and the domain was announced for sale on Bitcointalk with the source code in January 2015. Things get even weirder, especially when its neighboring country Canada, its ally United Kingdom and many more countries are making it easier for bitcoin companies to innovate and offer their services to the community. Whereas the CFTC did not impose any penalties on Riordan or his firm, and Riordan settled the case without admitting or denying the charges. “The ruling will be challenged and judges will apply common sense and decide it to be a currency” as happened in the Silk Road case. Now that Bitcoin is considered a “commodity”, the CFTC contends that Coinflip should have been registered and compliant with laws that govern “swaps”. To bank regulators, it’s a bank.