The Commodity Futures Trading Commission (CFTC), which is the main financial regulator in the United States, recently ordered a company offering bitcoin options to halt operations. The regulatory agency also ruled that bitcoin and other cryptocurrencies are classified as commodities and are covered by the Commodity Exchange Act.
The regulator issued an order filing and simultaneously settling charges against Coinflip, Inc. Derivabit and is chief executive officer Francisco Riordan for activity relating to commodity transactions without the proper licenses.
CFTC Ruling on Bitcoin Options
According to the CFTC press release, the bitcoin options platform does not comply with the Commodity Exchange Act and CFTC regulations by trading or processing swaps. Investigations revealed that from in or about March 2014 to at least August 2014, Coinflip and Riordan operated an online facility named Derivabit, offering to connect buyers and sellers of bitcoin options.
With that, CFTC required the company to cease and desist further violations of CFTC regulation and to comply with the specified undertakings.
Prior to this, bitcoin regulation has been mostly the domain of state governments, with the state of New York rolling out its BitLicense earlier this year and the state of California still working on its cryptocurrency bill.
Coinflip’s Derivabit bitcoin options platform caught the attention of the CFTC mostly because it designated put and call options for the delivery of bitcoin as eligible for trading on the Derivabit platform. In addition, CFTC said that Coinflip operated a facility for the trading of swaps but did not register the facility as a Swap Execution Facility or Designated Contract Market, as required.
“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,” commented Aitan Goelman, the CFTC’s Director of Enforcement.
lbl_button: ‘Tip us’,
lbl_address: ‘Use address below to donate. Thanks!’,