WASHINGTON (9/21/15)--The Commodity Futures Trading Commission (CFTC) has declared that virtual currencies such as bitcoin are “commodities” and are governed by the same laws as oil or wheat.
The regulator last week announced it had filed and settled charges against a Bitcoin exchange for facilitating the trading of option contracts on its platform.
The CFTC charged Coinflip Inc. with conducting activity related to commodity options, without registering with the agency or meeting rules for exemption (CoinDesk Sept. 18).
With the decision, the CFTC asserts its authority to provide oversight of the trading of cryptocurrency futures and options, which will now be subject to the agency's regulations. In the event of wrongdoing, such as futures manipulation, the CFTC will be able to bring charges against bad actors.
"The definition of a 'commodity' is broad ... Bitcoin and other virtual currencies are encompassed in the definition and properly defined as commodities,” the agency wrote.
If a company wants to operate a trading platform for Bitcoin derivatives or futures, it will need to register as a swap execution facility or designated contract market.
“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 Aitan Goelman, the CFTC's director of enforcement, in a statement.