In a closely watched case involving the cryptocurrency industry, a U.S. Federal Court 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 since it does not fall into the category of a security. This decision could mean that even if there were no futures or options market for My Big Coin specifically, the CFTC has jurisdiction of cryptocurrencies generally.
RK&O partner Paul Devlin discussed this ruling with GlobalCapital and outlined the various ways that agencies such as the CFTC gain oversight over such markets. Mr. Devlin noted that new legislation from the U.S. Congress seemed the least likely scenario, but that the CFTC could achieve this goal by making new regulations or providing new interpretations of existing rules, therefore defining the cryptocurrency spot market in a way that allows it to fall under existing rules that require CFTC oversight. Devlin noted that while this is a deliberate process, with input from the public, it can still be challenged and fought in court. Finally, he said the CFTC could continue its current strategy of increasing oversight through enforcement action.
Mr. Devlin said "It is too soon to tell what approach the CFTC will take in the long run, especially as it tries to figure out exactly how its own oversight will mesh with that of the SEC. Once the CFTC has a better feeling for how it wants to play its hand, it may try to make new regulations to clarify and establish its oversight for the market."
"Byte Me: CFTC’s bitcoin mania" - GlobalCapital