Join NexChange - the professional
network for the financial services
industry - and receive a free one-
year subscription to Forbes
What commodity status means for Bitcoin
It’s official, Bitcoin is now a commodity after getting the nod from the US Commodity Future trading Commision (CFTC) last week. But what does that mean?
The ruling came in the form of a slap on the wrist for US startup Coinflip, which was alleged to have allowed users to trade options based on bitcoin via its platform; Derivabit. By ruling that Bitcoin is a commodity, the CFTC brought Coinflip under its purview.
On the plus side this extra oversight can help clean up trade in Bitcoin, and bring the crypto-currency even closer to legitimacy. It also means less chance of blow ups like Mt. Gox, the Japanese bitcoin trading platform that lost 850,000 Bitcoins (then worth $500 million) when it imploded early last year.
At the same time Bitcoin startups can expect greater pressure from regulators, which means the cost of doing business with Bitcoin could creep higher. Here is what Aitan Goelman, the CFTC’s Director of Enforcement, had to say:
“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.”
Photo: BTC Keychain