One U.S. judge has declared that cryptocurrencies can be regulated as commodities.
While the Securities and Exchange Commission and Commodities Futures Trading Commission hold hearings and debate just how to properly regulate these new digital assets such as bitcoin, Ripple and others, U.S. District Judge Jack Weinstein in Brooklyn took a stand and made his views known. The federal regulators, as well as Congress, have not passed any policy or laws to policy this new marketplace.
Virtual currencies like bitcoin can be regulated as commodities by the U.S. Commodity Futures Trading Commission. Period.
According to Reuters who reported the story first, said the CFTC had standing to bring a fraud lawsuit against New York resident Patrick McDonnell and his company Coin Drop Markets, allowing the case to go forward.
Weinstein also entered a preliminary injunction barring McDonnell and Coin Drop Markets from engaging in commodity transactions.
McDonnell, who is representing himself, declined to comment on the decision.
The CFTC, which is tasked with regulating commodity, futures and derivatives markets, first determined that virtual currencies, also known as cryptocurrencies, are commodities in 2015.
Weinstein upheld that determination on Tuesday, saying it was supported by the plain meaning of the word commodity and that the CFTC had broad leeway to interpret the federal law regulating commodities.
In its lawsuit, announced in January, the CFTC said that since about January 2017, McDonnell and his company fraudulently offered customers virtual currency trading advice.