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Bitcoin Government The Almighty Buck

Bitcoin Is Officially a Commodity 59

Taco Cowboy writes: According to the Commodity Futures Trading Commission (CFTC), Bitcoin and other all virtual currencies have been officially categorized as commodities, just like crude oil or wheat. The CFTC on Thursday announced it had filed and settled charges against a Bitcoin exchange for facilitating the trading of option contracts on its platform.

By this action, the CFTC asserts its authority to provide oversight of the trading of cryptocurrency futures and options, which will now be subject to the agency's regulations. In the event of wrongdoing, such as futures manipulation, the CFTC will be able to bring charges against bad actors. If a company wants to operate a trading platform for Bitcoin derivatives or futures, it will need to register as a swap execution facility or designated contract market, just like the CME Group. And Coinflip—the target of the CFTC action—is hardly the only company that provides a platform to trade Bitcoin derivatives or futures
In other Bitcoin news, reader McGruber notes that the CFO of BitPay, a Bitcoin payment service, was successfully phished, costing the company $1.8 million worth of Bitcoins. The company is attempting to recover the money from its insurer.
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Bitcoin Is Officially a Commodity

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  • by dgenr8 ( 9462 ) on Friday September 18, 2015 @09:47AM (#50548613) Journal

    Technically, this means BTC futures can only be manipulated with CFTC permission.

    Not that they would ever allow such a thing.

    • I don't know, but given the fact that futures are mainly baked air (you can trade in crops that will never be planted) and the finite amount of bitcoins, this gives an interesting situation.
      • by lgw ( 121541 )

        you can trade in crops that will never be planted

        No, that's not how it works. Every futures contract must be delivered (a small percentage are delivered by buying the commodity on the market the day the contract matures, mostly due to crop failure, but still: somebody planted and grew the crop that was delivered). The contracts are mostly written by farmers, and mostly expire in the hands of food manufacturers. They may pass through the hands of 1000 speculators in the meantime, but the contract always represents real product that must be delivered.

    • Laugh and cry "tinfoil!", but I'm actually curious: would there be a way to backdoor/engineer a means to actually restrict/kill BTC by this route, or at least (eventually) corral it under official governmental control?

      It appears that the CFTC has just declared a monopoly-by-fiat over trading a certain aspect of BTC (futures in this case). I don't think there's a route to do something nasty from here, but still, there's that nagging feeling...

      • by slew ( 2918 )

        would there be a way to backdoor/engineer a means to actually restrict/kill BTC by this route, or at least (eventually) corral it under official governmental control?

        The CFTC probably won't be able to restrict BTC mining or usage anymore than they can keep you from drilling for oil in your backyard or using oil to run the generator in your fallout shelter (although other parts of the government would probably have issue with you drilling for oil in your backyard or digging a fall-out shelter).

        However, if you were wanting to buy or sell a delivery contract for BTC you will be potentially mining (or buying from someone else for delivery if it's cheaper) in the future, the

      • by lgw ( 121541 )

        It appears that the CFTC has just declared a monopoly-by-fiat over trading a certain aspect of BTC (futures in this case). I don't think there's a route to do something nasty from here, but still, there's that nagging feeling...

        This limits the nasty. Goldman Sachs can destroy any unregulated market for profit, and quickly. This helps prevent that.

        The biggest single cause for the 2008 financial crisis was GS doing exactly that to unregulated mortgage-backed securities. The CBT went to the SEC to ask that mortgage-backed securities be traded just like other securities (financials are a bit different from commodities, most of the same market rules apply, but different regulators), but the SEC rebuffed them. But then, most senior

        • by lgw ( 121541 )

          Oh, I should add that indirectly, there is one very nasty side-effect here: taxes. The worst outcome for BTC tax-wise is to be treated as a commodity, as commodities have higher tax rates for small investors, compared to other capital gains. This isn't an IRS ruling, but the IRS already seemed to be leaning this way.

      • They can claim all the authority they want. The source code is open. They can also claim authority to regulate the process of calculus too. They can pay rewards to snitches who turn in people doing unreported calculus, and some people will probably get caught.

        The US government does have a great deal of control over the US dollar. So they might be able to regulate the trading of US dollars with bitcoin, but this will be as limited as the government's ability to prevent other illegal things with US curren

        • What makes you think anybody's trying to regulate Bitcoin? There are laws here on transactions with US dollars, and now there's laws applying to trading certain contracts about Bitcoin. There's similar contracts about lots of things, and the government doesn't regulate them.

          What this means is that the government is taking Bitcoin seriously as something of potential value.

          • What makes you think anybody's trying to regulate Bitcoin?

            What makes you think that I think anybody is trying to regulate bitcoin?

            If you had read the post I was responding to, you'd see that that person was specifically asking if it would be possible for the government to do this.

  • I have categorized bitcoins as flibbywhatxits, and my organization, the flibbywhatxits trade commission, is therefore in charge of all bitcoin trading and exchange and anyone trading or operating an exchange must do so by my rules.
  • "In other Bitcoin news, reader McGruber notes that the CFO of BitPay, a Bitcoin payment service, was successfully phished, costing the company $1.8 million worth of Bitcoins."
    If there's one thing I learned from the job I just quit, if the president/CEO is an nontechnical moron with a low intelligence level who can't make proper decisions or perceive threats correctly, you should leave immediately. Ready for the scary part? Amazon and Newegg use bitpay to power their bitcoin payment backend.
  • The US government, which has proven it cannot and will not prosecute any form of wrongdoing whatsoever in the financial rackets, sorry markets, and which thereby loses all claim to legitimacy, now appoints itself to be in charge of prosecuting wrongdoing in Bitcoin futures markets? Harr deee harrr.

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