Bitcoin Is Officially a Commodity

Taco Cowboy writes: According to the Commodity Futures Trading Commission (CFTC), Bitcoin and other all virtual currencies have been officially categorized as commodities, just like crude oil or wheat. The CFTC on Thursday announced it had filed and settled charges against a Bitcoin exchange for facilitating the trading of option contracts on its platform.

By this action, the CFTC asserts its authority to provide oversight of the trading of cryptocurrency futures and options, which will now be subject to the agency's regulations. In the event of wrongdoing, such as futures manipulation, the CFTC will be able to bring charges against bad actors. If a company wants to operate a trading platform for Bitcoin derivatives or futures, it will need to register as a swap execution facility or designated contract market, just like the CME Group. And Coinflip—the target of the CFTC action—is hardly the only company that provides a platform to trade Bitcoin derivatives or futures In other Bitcoin news, reader McGruber notes that the CFO of BitPay, a Bitcoin payment service, was successfully phished, costing the company $1.8 million worth of Bitcoins. The company is attempting to recover the money from its insurer.

Comments

The CFTC is United States only

[dgenr8]

Technically, this means BTC futures can only be manipulated with CFTC permission.

Not that they would ever allow such a thing.

Re:The CFTC is United States only

[Penguinisto]

Laugh and cry "tinfoil!", but I'm actually curious: would there be a way to backdoor/engineer a means to actually restrict/kill BTC by this route, or at least (eventually) corral it under official governmental control?

It appears that the CFTC has just declared a monopoly-by-fiat over trading a certain aspect of BTC (futures in this case). I don't think there's a route to do something nasty from here, but still, there's that nagging feeling...

Re:The CFTC is United States only

[lgw]

It appears that the CFTC has just declared a monopoly-by-fiat over trading a certain aspect of BTC (futures in this case). I don't think there's a route to do something nasty from here, but still, there's that nagging feeling...

This limits the nasty. Goldman Sachs can destroy any unregulated market for profit, and quickly. This helps prevent that.

The biggest single cause for the 2008 financial crisis was GS doing exactly that to unregulated mortgage-backed securities. The CBT went to the SEC to ask that mortgage-backed securities be traded just like other securities (financials are a bit different from commodities, most of the same market rules apply, but different regulators), but the SEC rebuffed them. But then, most senior SEC officials used to work for GS, or will soon work for GS, so that's hardly a surprise. Had the MBS market been a normal financial market, the risks would have been understood, and the crisis would only have been one of banks writing mortgages they shouldn't have (and just letting those banks fail was no big deal).

Re:Need a new cryptocurrency

[doublebackslash]

I tend to not think of Bitcoin as currency. A commodity fits rather well but isn't quite perfect.
I view it as a medium for the transfer of value. That gives it some value since it is competing with costly and complex alternatives such as credit card processors.

Everything else that people do with it can be seen as being derived from that. Speculation and trading are natural consequences of anything that people ascribe value to.

When used as an individual not wanting to engage in futures or investment, but only in the exchange of value for goods and services Bitcoin is interesting.

People mining bitcoins are the facilitators of that exchange, hence the reward for mining a block. The focus for many has been on the act of mining, but the actual use of it in buying / selling is much more compelling for most. You can use the exchanges to turn money into bitcoins and vice-versa and then use them to buy goods or services.

You're right that is isn't money, but that is the goal. To take it from a commodity-like to a full blown fiat currency. It is a great experiment.