Nicholas Wendland was published on the website of the Chicago Chapter of the Association of Corporate Counsel regarding court rulings that virtual currencies are commodities and subject to Commodity Futures Trading Commission (CFTC) jurisdiction.
In “Another Court Rules Virtual Currencies are Commodities Subject to CFTC Oversight,” which originally appeared in Drinker Biddle's SECurities Law Perspectives blog, Nicholas discusses recent enforcement actions by the SEC, CFTC and FINRA.
The U.S. District Court for the District of Massachusetts is the latest court to rule that virtual currencies are commodities, and subject to CFTC jurisdiction. A “commodity” as defined in the Commodities Exchange Act (CEA) includes a list of enumerated agricultural products, “and all other goods and articles … and all services, rights, and interests … in which contracts for future delivery are presently or in the future dealt in.”
The defendants argued that a commodity under this definition required the specific item at issue be the subject of a futures contract. The only existing futures are on Bitcoin (CME’s BTC and CBOE’s XBT); no other virtual currency currently underlies a futures contract. The court rejected the defendants’ argument, holding that the “CEA only requires the existence of futures trading within a certain class … to be considered commodities.”