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.
CFTC files and settles suit against Coinflip
Last week Thursday, the CFTC announced that it had ordered San Francisco based Coinflip to cease trading after the company repeatedly failed to register itself with and follow the regulations of the CFTC. The CFTC specifically went after Coinflip for the trading of Bitcoin options on its platform.
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“CFTC holds that bitcoin and other virtual currencies are a commodity covered by the commodity exchange act,” the regulator said in a statement on Sept. 17.
“In this order, the CFTC for the first time finds that Bitcoin and other virtual currencies are properly defined as commodities,” according to the same statement.
“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 his own statement.
What does it mean for traders and the CFTC?
Quite simply, those that go through the drawn out difficult process of mining Bitcoins will not be bothered with the CFTC decision that will essentially allow them to continue making or losing money largely anonymously. It will, however, have a trickle-down effect on other firms that provide a platform for trading Bitcoin futures and derivatives.
The CFTC has essentially put these companies on notice and said that it believes that it has every right to view Bitcoin as a commodity and in the case of any manipulation will have free reign to prosecute offenders under its charter and regulations.
While others may choose to fight the decision, Coinflip and its CEO essentially threw up its hands in the negotiation of a settlement.
“The cease and desist was a fair settlement,” Francisco Riordan, Coinflip’s chief executive officer, said following the CFTC statement. He also pointed out that customer funds had been refunded in July 2014, before the firm was approached by the CFTC adding, “There wasn’t enough trade volume for the site to sustain itself.”