US Regulator Declares Bitcoin as Commodity

The U.S. Commodity Futures and Trading Commission grants commodity status to bitcoin.

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On Thursday, the CFTC announced it had filed and settled charges against the bitcoin exchange for enabling the trading of options contracts on its platform. Under Section 4c of the CEA and Part 32 of the CFTC’s Regulations, commodity option transactions must either be conducted in compliance with provisions of the CEA or Regulations otherwise applicable to swaps, or conducted pursuant to Regulation 32.3, the “trade option” exemption.

It comes as the commission ordered San Francisco-based Coinflip and its chief executive Francisco Riordan to cease “illegally offering Bitcoin options” and “operating a facility for trading or processing of swaps without registering”. There’s been no mention of any other businesses operating without permission.

The CFTC published its decision September 17, and the agency says bitcoin operators should get registered immediately under the relevant regulations and laws.

In the past week, two important news stories surfaced involving Bitcoin, some of the world’s biggest banks, and government finance agencies which leads us to believe the digital currency is about to be slowly adopted into the daily routine of the banking and trading fields. “It’s something parties have long already taken for granted”.

In that order, the CFTC has for the first time found that Bitcoin as well as other virtual currencies are defined property as commodities, said a press release. With this said, these companies are now liable to register themselves as a swap execution facilities or designated contact market – or face the wrath of law.

Because of the novelty of Bitcoin and other cryptocurrencies, firms working with them face an uneven and uncertain regulatory framework.

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The CFTC decision only sets policy for the CFTC, said Shadab, who is also a fellow at the Coin Center, a think tank involved in virtual currencies.

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