The official CFTC press release reads:
“In this order, the CFTC for the first time finds that Bitcoin and other virtual currencies are properly defined as commodities.”
Now digital currencies such as bitcoin are in the same category as gold or oil in the U.S. This new authoritative policy gives the agency oversight with businesses operating with the virtual money and the means to regulate it.
CFTC director of Enforcement Aitan Goelman:
“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.”
The agency also issued an order against Coinflip to cease and desist operations until the business is compliant, according to the CFTC press release. Coinflip was operating an online platform known as Derivabit, offering bitcoin derivatives to its clientele. The startup offered opportunities to purchase bitcoin option contracts, but were not compliant with CFTC regulations.
However, the founder of Deravabits operations, Francisco Riordan said the CFTC was “fair,” adding that customers’ funds were refunded prior to this ruling. Now the company must file an application with the commission before reopening. There’s been no mention of any other businesses operating without permission.
Recently the derivative exchange and clearinghouse LedgerX was granted temporary status with its registration for a Swap Execution Facility (SEF). The company has complied with previous commodity regulations by applying for SEF as a Derivative Clearing Organization on September 29, 2014.
LedgerX founders believe that the temporary status will help them get their business off the ground and hope to be the first regulated clearing exchange within the institutional market. With the temporary status the startup will continue forward with the CFTC application over the next coming months.
With LedgerX’s forward movement going well however, it should be noted the company is not the only exchange offering derivative options. Although, the company is different because it offers physical bitcoin contracts, TeraExchange is the first derivative exchange to work with U.S. regulators, offering products settled in dollars as opposed to bitcoin.