The US derivatives regulator, which oversees futures and futures options trading, brought its first case against a Bitcoin trading platform on Thursday, declaring in a statement that virtual currencies are deemed “commodities” and bitcoin trading must adhere to existing law.
The CFTC did not impose any penalties on him or his firm, and Riordan settled the case without admitting or denying the charges.
By this action, 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.
The ruling arose after the CFTC ordered two outfits, Coinflip, Inc. d/b/a Derivabit (Coinflip), to stop their Bitcoin-trading activities.
The CFTC’s bitcoin designation comes three months after New York regulator the Department of Financial Services (DFS) announced sweeping new rules compelling digital-currency operators to apply for a license with the DFS.
While market participants have long discussed whether Bitcoin could be defined as a commodity, and the CFTC has pondered whether the cryptocurrency falls under its jurisdiction, the implications of this move are potentially numerous.
Risks surrounding the virtual money came to light more than a year ago when bitcoin-exchange platform Mt. Gox filed for bankruptcy, rattling the market and cratering bitcoin’s value.
The agency said Coinflip was operating an online platform known as Derivabit, which helped match up buyers and sellers with Bitcoin options. 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. There’s been no mention of any other businesses operating without permission.
The debate on bitcoin can be defined as a commodity or not as been here for quite some time and the FCTC.
The nine banks which expressed their interest are JP Morgan, State Street, UBS,
Originally appeared at: http://tvnewsroom.org/newslines/business/bitcoin-is-a-commodity-not-a-currency-138124/