In a recent press release, the CFTC (Commodity Futures Trading Commission) revealed that the US District Court for the District of Massachusetts ruled digital currencies to be classified as commodities.
“[The CFTC will be empowered to] prosecute fraud involving virtual currency and denying the defendant's’ motion to dismiss the CFTC’s amended complaint.”Senior Judge Rya W. Zobel gave the order on 26th September in the My Big Coin case. It affirmed the CFTC’s assertion that MBC is a commodity under the Commodity Exchange Act (CEA) as MBC “is a virtual currency and it is undisputed that there is futures trading in virtual currencies (specifically involving Bitcoin).” The court has agreed that the interpretation of the term ‘commodity’ should be stretched into several categories and not specific items. This includes:
“A host of specifically enumerated agricultural products” and “all other goods and articles … and all services rights and interests … in which contracts for future delivery are presently or in the future dealt in."On top of this, the court accepted this stretched out approach as it would be beneficial for the common good of the commodity futures trading industry and so it would start to assist regulatory bodies to comprehensively protect the markets. The CFTC Director of Enforcement, James McDonald had his say on the matter of the ruling saying:
“This is an important ruling that confirms the authority of the CFTC to investigate and combat fraud in the virtual currency markets. This ruling, like the one in McDonnell from Judge Weinstein in the Eastern District of New York, recognizes the broad definition of the commodity under the CEA, and also that the CFTC has the power to prosecute fraud with respect to commodities including virtual currencies. We will continue to police these markets in close coordination with our sister agencies.”The court rejected the defendant's allegations that the CFTC’s anti-fraud ruling over MBC should apply only when fraudulent market manipulation as the stretched out meaning of the word commodity “explicitly prohibits fraud even in the absence of market manipulation.” What are your thoughts? Let us know down in the comments below! References: Blokt