The CFTC Settles case with Coinflip, Calls Bitcoin a Commodity

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The CFTC Settles case with Coinflip, Calls Bitcoin a Commodity

This is for the first time that the US derivatives regulators have brought their case against a Bitcoin trading platform. According to the press release from the organization that case came on Thursday wherein it has come to notice that the authority has declared that virtual currencies are deemed “commodities” covered under existing law.

Nonetheless, the CFTC or the Commodity Futures Trading Commission reached a settlement with San Francisco-based Coinflip and its Chief Executive Francisco Riordan and considered that Bitcoin, a Web-based cryptocurrency sold through exchanges, provides a vehicle for moving money across the world quickly and anonymously without the need for third-party verifications.

Coinflip was Operating an Online Platform

The reports also claim that Coinflip which was operating an online platform known as Derivabit to help match up buyers and sellers with Bitcoin options came to observation quite early; however, the authorities were looking for the right moment to take any action. A major issue still hangs around whether Bitcoin is a currency or a commodity.

However, as the CFTC considers Bitcoin options as deemed commodities, the agency says that the business should have been properly registered and subject to the laws governing swaps. Nonetheless, the case that was brought into notice on Thursday is not the first time US regulators have sought to bring virtual currencies into the regulatory fold.

Aitan Goelman, the head of the CFTC’s Enforcement Division was quoted saying that 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.

A Fair Settlement with the Bitcoin Company

From the observation it looks the two parties reached to an amiable settlement as even Francisco Riordan, who represented himself in the case, said he felt the settlement with the CFTC was fair. According to him all of his customers’ money was refunded in July 2014, before the CFTC contacted him, and that there was not enough trade volume for the site to be sustained.

Nonetheless, the settlement was quite an achievement as the two parties involved don’t have any grievances. Whereas the CFTC did not impose any penalties on Riordan or his firm, and Riordan settled the case without admitting or denying the charges.

To contact the reporter of this story: Deepak Tiwari at deepak@forexminute.com