US Mulls Regulating Bitcoin Under Rules for Commodities

The US Commodity Futures Trading Commission (CFTC) has announced that it is investigating whether it has the authority to regulate bitcoin and other digital currencies, Reuters reports.

"We are looking into that," Mark Wetjen, the CFTC's acting chairman, said at an industry conference. "It's been initiated, there's been an internal discussion at the staff level."

The CFTC, which regulates the swaps and futures market, is studying whether bitcoin falls under the same rules as commodities markets, according to Wetjen. He said:

"I think people [within the CFTC] believe there's a pretty good argument that it would fit that definition."

Issues remain

"Then there's a separate question about whether or not there is some derivative contract based on, or denominated in, a virtual currency and whether that's listed on an exchange," Wetjen stated, adding that the issue remains to be looked at in detail.

Wetjen said he could not predict the outcome of the discussions or give a timeframe for regulation. The chairman has previously spoken out about cryptocurrencies. In a statement before the US Senate Committee he said:

"Virtual currency [...] does present new risk, as a firm would be interacting outside of bank payment channels, increasing the risk of hacking or fraud, among other cybersecurity issues. The CFTC is working with registrants that are seeking to accept virtual currencies to educate them about best practices."

Change of attitude

The comments follow New York State's recent decision to commence regulating bitcoin exchanges this week.

Referencing the collapse of Mt. Gox and other exchanges, New York’s Superintendent of Financial Services, Benjamin M. Lawsky, announced that the state is accepting applications for digital currency exchanges, with such submissions representing a formal commitment to the regulatory process.

Lawsky said that these businesses will be regulated under new New York regulation, anticipated to be in place by the middle of 2014.

Wetjen's comments seem to indicate that regulation is now very much on the horizon across the US as a whole, which will come as a relief to many bitcoin business that had complained of a lack of regulations to abide by.

US law image via Shutterstock