The Commodity Futures Trading Commission (CFTC), a regulator in the U.S., ruled on Thursday that Bitcoin is a commodity. This place the virtual money on the same level as crude oil, wheat, coal or iron ore.
CFTC made the ruling to settle charges filed against a Bitcoin exchange that facilitated trading of option contracts on its platform, reports Bloomberg. In making the landmark decision, the regulator declared not only the cryptocurrency but also other virtual currencies are commodities.
With the ruling, CFTC has oversight over the trading of Bitcoin and other virtual currencies. Bloomberg notes that the impact of the ruling are potentially numerous because futures manipulations would result in charges being filed against virtual currencies companies.
The decision mandates companies that want to run a trading platform for Bitcoin derivatives or designated contract market. Aitlan Goelmann, CFTC director of enforcement, said in a statement, "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."
The move, while averting Bitcoin scams, would increase the cost of doing business for virtual currency companies.
Coinflip, the company involved in the CFTC decision, said the cease and desist order issued by the regulator was a fair settlement. Coinflip CEO Francisco Riordan said the company has refunded all customer funds in July 2014 before CFTC contacted Coinflip. Riordan adds that Coinflip did not have sufficient trade volume for the site to sustain itself.
However, readers of Engadget are wary of the classification of Bitcoin as a commodity. Theoilman points out that it makes taxes around cryptocurrencies "egregious enough that people won't use them as money. If that is the case, virtual currencies lose their trading value, making the CFTC decision a nail in the coffin for Bitcoin.