It was the little currency that could, and now it really can. Despite being an effectively made up currency that was once used almost exclusively on the Web, the bitcoin is inching ever closer to legitimacy. Late last week, the U.S. Commodity Futures Trading Commission (CFTC) took the virtual currency further into official recognition than ever before, defining bitcoin and other digital currencies as commodities. “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 CFTC director of enforcement Aitan Goelman. So even though the ruling came about as a slap on the wrist for the currency, it actually may be a good thing for bitcoin users.
In a press release, the CFTC explained it had “issued an Order filing and simultaneously settling charges … Coinflip and its chief executive officer Francisco Riordan for conducting activity related to commodity options transactions without complying with the Commodity Exchange Act (CEA) and CFTC Regulations.” The landmark decision, the Commission said, marks “the first time that bitcoin and other virtual currencies are properly defined as commodities.”
Since the controversial debut of the bitcoin, whose rather sullied past includes its usage in black markets and online drug trades, the CFTC has weighed the pros and cons of exercising jurisdiction over such cryptocurrency. Simultaneously, businesses and markets have debated whether or not bitcoins should be viewed as commodities, but with this latest CFTC ruling, it seems that both of these questions have been answered. With the increased regulations that seem to inevitably stem from the decision, the agency may be able to exercise considerably more control over how, when, and where bitcoins can be used.
So welcome to the big leagues, bitcoin. It may not be all it’s cracked up to be.