Under the settlement, Derivabit agreed to stop violating the Commodity Exchange Act and other commission regulations.
Bloomberg reported that by making this order, the CFTC asserted its authority to provide oversight of the trading of virtual currency futures and options, which will now be subject to regulations and legislation.
Coinflip Inc., which does business under the name Derivabit, and its CEO, Francisco Riordan, were charged with conducting activity related to commodity options without registering with the Commodity Futures Trading Commission or meeting rules for exemption.
Houman Shadab, an expert on financial law and regulation at New York Law School, said that the CFTC treating Bitcoin as a commodity “is not surprising”.
The latest decision from the CFTC means all cryptocurrency transactions should comply with regulations and governing legislation of the Commodity Exchange Act. If every bitcoin transaction is worthy of tax treatment over the fluctuation of the market price of bitcoin, the United States government is essentially begging to make a swath of technologists tax cheats by accident. Any manipulation or wrongdoing on the part of bitcoin operators will now be dealt with by the CFTC.
That is the groundbreaking ruling issued Thursday in settling a case against San Francisco-based startup Coinflip in which the company was ordered to cease operations. The new ruling from the CFTC did not surprise Bitcoin industry watchers.
Last year, the Internal Revenue Service began to offer some clarity about the status of bitcoins by saying that virtual currencies such as bitcoins are “treated as property for US federal tax purposes”. Originally, the agency oversaw futures contracts for grains and other commodities that businesses like farms and ranches used to hedge against bad weather and other circumstances, but its mandate has grown along with the use of derivatives throughout finance. A good example is the recruitment of R3, by a group of banks including Royal Bank of Scotland, he Commonwealth Bank of Australia (CBA) and Barclays.