By Vishakha Sonawane
Virtual currencies like bitcoin are now officially commodities, the U.S. Commodity Futures Trading Commission announced Thursday. The CFTC also said that it has settled charges against a Bitcoin exchange for operating an online business associated with commodity options without registration.
This will force cryptocurrencies to abide by CFTC regulations during transactions. The ruling comes after CFTC ordered San Francisco-based Coinflip and its CEO Francisco Riordan to close Derivabit, a website that offered to connect buyers and sellers of Bitcoin option contracts. The CFTC filed and settled charges against Coinflip and Riordan Thursday.
"In this order, the CFTC for the first time finds that bitcoin and other virtual currencies are properly defined as commodities," the regulator said, in a statement. Under the ruling, a company will need to register in order to operate a trading platform for Bitcoin derivatives or futures.
In December 2014, the CFTC's chairman told a Senate committee that the commission failed to oversee bitcoin derivatives.
"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, head of the CFTC's Enforcement Division, in the statement Thursday.
The CFTC did not fine Riordan and his firm, and Riordan settled the case without confessing or denying the charges, according to Reuters. He represented himself in the case and reportedly said the settlement was fair.