In a landmark action, the US Commodity Futures Trading Commission (CFTC) ordered a bitcoin trading platform cease illegally offering bitcoin options and to cease operating a facility for trading or processing of swaps without registering.
In the decision, CFTC ruled that bitcoin and other virtual currencies are commodities and thereby covered by the Commodities Exchange Act.
This therefore gives the regulatory body the right to observe and regulate the business operations that use virtual currencies for trading.
Innovation ‘no excuse’ for not following the law
“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.
The CFTC has ruled that the trading platform in question, Coinflip, designated put and call options for the delivery of bitcoins in a manner that was not in compliance with the CEA. It also found that Coinflip operated a facility for the trading of swaps but did not register the facility as a Swap Execution Facility or Designated Contract Market, as required.
“The CFTC for the first time finds that Bitcoin and other virtual currencies are properly defined as commodities,” the commission said in a statement.
The Commission has taken a very strong approach to cryptocurrencies when it took action against another bitcoin trading platform this week.
It ruled TeraExchange failed to act against prohibited transactions showing that the commission is ramping up its crackdown on illegal cryptocurrency trading activity.
This enforcement action is the third this year after Coinflip and Securities and Exchange Commission’s ruling against Sand Hill Exchange.
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