U.S. judge rules that cryptocurrencies are commodities – backs CTFC

by | 7 Mar, 2018

 

The Commodity Futures Trading Commission can legally classify and regulate cryptocurrencies as commodities, according to a new ruling from a federal judge that allowed a CTFC lawsuit against a firm called Coin Drop Markets concerning fraud. Judge Jack Weinstein from a district court in New York ruled that “virtual currencies can be regulated by CFTC as a commodity.”

The Memorandum & Order for the court case involving Coin Drop Markets and its owner, Patrick McDonnell, pushed several arguments from authors in favour of classifying Bitcoin as a commodity, including the following passages: “It would make sense for regulators to treat Bitcoin as a commodity. Commodities are generally defined as ‘goods sold in the market with a quality and value uniform throughout the world.’ This categorization would be appropriate because it realistically reflects the economic behavior of Bitcoin users and squares with traditional economic conceptions of exchange”

In another passage of the text it reads: “Furthermore, while Bitcoin acts as a money commodity in its community of users, from a pricing standpoint, it is valued like other commodities. The price of traditional commodities, like gold, silver, and agricultural products, vary in accordance with their demand and scarcity. When more people want a commodity that has a fixed supply, the price rises. Similarly, the price of Bitcoin fluctuates according to the same fixed supply model. Bitcoins are scarce because the algorithm controlling how many Bitcoins are released into the market through mining is designed to taper the supply of bitcoins, until no more are created.”

Legislation to govern the crypto market is still in its infancy in America and the federal government has not made any major moves on regulation just yet, but this action and the kind of language used in the memorandum certainly points to the prospect of more rules for the marketplace in the future.

Bitcoin prices have been moving largely sideways as the crypto craze fades, currently sitting at $10,537, though short-term selling pressure may move it towards $10,300.

March brings little good news for BTC investors

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ALL RIGHTS RESERVED © INVSTR LTD. 2018

Risk Disclosure:
Invstr is a technology platform, not a registered broker-dealer or investment adviser. Invstr does not offer its own recommendations of any security or provide its own research to any user regarding any security transaction or order.
Please note, investing involves risk and investments may lose value. Past performance does not guarantee future results.
Brokerage services are provided by the following:
US-traded securities, including fractional trading, are provided to Invstr users by DriveWealth LLC, a regulated member of FINRA/SIPC. DriveWealth may not establish investment accounts to residents of certain jurisdictions. For more information, including disclaimers, risk and transaction fees click here.
India account traded securities are provided by SIC Stocks & Services PVT Ltd. SIC does not make any personal recommendations to buy, sell or otherwise deal in investments. Investors make their own investment decisions. The services and securities provided by SIC may not be suitable for all customers and, if you have any doubts, you should seek advice from an independent financial adviser. For more information and disclaimers, click here.

 

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