Paul Devlin discusses federal court ruling on cryptocurrencies as commodities

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September 27, 2018

In a closely watched case involving the cryptocurrency industry, U.S. District Judge Rya Zobel has ruled that a cryptocurrency is a commodity. With this decision, the Commodity Futures Trading Commission (CFTC) can proceed with its case against the cryptocurrency My Big Coin as it does not fall into the category of a security.

RK&O partner Paul Devlin spoke with Crowdfund Insider about the case, noting that the decision is only the second time the court has directly addressed whether a virtual currency that lacks a futures market is a “commodity” under the Commodity Exchange Act, and therefore subject to the CFTC’s enforcement jurisdiction. Mr. Devlin said the CFTC prevailed even though the virtual currency at issue does not trade in futures markets.  

“This question is critical to a cohesive federal regulatory framework because the vast majority of virtual currencies are not traded in futures markets, nor are they necessarily “securities” subject to SEC oversight,” he said. “While the headline will no doubt be here that the CFTC won and virtual currencies are commodities, a careful reading reveals a mixed bag and many important questions remain in the wake of Judge Zobel’s decision. The court rejected the CFTC’s most sweeping arguments and left open the possibility that the answer could change in a different procedural context. The court dismissed out of hand the CFTC’s strongly-pressed argument that a statutory 'commodity' need not be linked to futures trading."

"Judge Rules that CFTC Has Jurisdiction in Case Against My Big Coin ICO & Allegations of Fraud" - Crowdfund Insider