Federal Judge Rya Zobel declared that cryptocurrencies meet the definition of a commodity. This is very important for the crypto space, which is working in many ways toward a better regulatory environment. This would mean that virtual currencies fall within the jurisdiction of the Commodity Futures Trading Commission (CFTC).
Federal Judge Considers Cryptocurrencies as Commodities
The Judge made this declaration in the case against My Big Coin Pay Inc. presented by the CFTC. The regulatory agency brought a lawsuit against Randall Carter and his company at the beginning of the year. My Big Coin Pay was accused of a $6 million dollars’ fraud. According to the court, the CFTC claims that the company lured investors by giving a ‘fake’ Bitcoin. Moreover, the company said that the coin was backed by gold.
However, the company answered by filing a motion that explained that the CFTC had no jurisdiction on the virtual currency. The company’s lawyers argued that My Big Coin did not operate as a commodity or a service with futures trading options.
Nonetheless, the Judge stated that My Big Coin follows the classification of a commodity stipulated by the Commodity Exchange Act. That means that the CFTC’s has jurisdiction over My Big Coin and other virtual currencies.
That decision is quite important for the whole cryptocurrency community. This court ruling would allow the CFTC to control the virtual currency market. During the last years, the United States has been working in order to classify cryptocurrencies. There are some regulatory agencies that have classed virtual currencies in different ways.
For example, the Internal Revenue System (IRS), considers that cryptocurrencies are property. This has been decided in this way for tax purposes, which are in charge of the agency. The Securities and Exchange Commission (SEC) classified virtual currencies as normal currencies. However, tokens related to initial coin offerings (ICOs) are considered as securities.
The SEC has also been trying to define whether XRP is a security or not. It will be important to follow how these agencies will find a common consensus regarding crypto classification.
Carlos is an international relations’ analyst specializing in cryptocurrencies and blockchain technology. Since 2017, Carlos has written extensively for UseTheBitcoin and other leading cryptocurrency sites; with over 2,000 articles published.