In Two Recent Orders, CFTC Holds that Bitcoins Are Commodities
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- The CFTC has issued an order holding that virtual currencies, including Bitcoin, are commodities subject to the Commodity Exchange Act and that Coinflip, Inc. and its CEO violated the Commodity Exchange Act and the CFTC regulations by operating an online trading facility that offered commodity options without registering as a designated contract market or swap execution facility.
- The CFTC has also issued an order holding that TeraExchange LLC, a provisionally registered SEF, by actively facilitating the execution of a Bitcoin swap, had violated its obligation under the Commodity Exchange Act and the CFTC regulations to enforce rules prohibiting wash trading and prearranged trading on its SEF platform.
- These orders are the first enforcement actions taken by the CFTC with respect to Bitcoin transactions. The orders and related comments of CFTC staff suggest the agency will closely monitor such transactions.