A U.S. federal judge ruled that cryptocurrencies, such as bitcoin, can be regulated as commodities by the U.S. Commodity Futures Trading Commission.
Statement fromRopes & Gray investment management counsel Ed Baer:
While District Judge Weinstein’s ruling confirms the U.S. Commodity Futures Trading Commission’s prior determination that virtual currencies like bitcoin are “commodities” subject to regulation by the CFTC, recent statements by U.S. Securities and Exchange Commission Chairman Jay Clayton suggest that various types of these cryptocurrencies – especially coins issued in initial coin offerings (or ICOs) – may be securities subject to regulation by the SEC. The challenge for cryptocurrency exchanges and investors, as well as for regulators such as the SEC and CFTC, will be to determine which of the over 1,000 types of these cryptocurrencies are securities and which ones are not. Given that the test used to determine whether an instrument is a security was developed more than 60 years before Satochi Nakamoto published the paper describing bitcoin, the uncertainty around the regulatory treatment of most cryptocurrencies will remain despite Judge Weinstein’s ruling.