CFTC institutes first action against bitcoin options trader

Because of that, CFTC is bringing the dealing in BItcoin, long prized due to its anonymity, into the bright lights, while it could help to clean up trading in the US around this product, potentially helping avoid a repeat of the escapade in Mt. Gox. Some argue that bitcoin should be governed under the Securities and Exchange Commission as a security, but this press release from the CFTC has clearly outlined its jurisdiction over cryptocurrencies. If there is any irregularity, such as manipulation, the CFTC may file charges against the officials of that market.

The CFTC or, the U.S. Commodity Futures Trading Commission just today submitted an Order filing, as well as settlement of charges against Coinflip, Inc., doing business as Derivabit, based in San Francisco, CA- as well as its Chief Executive Officer, Francisco Riordan. If every bitcoin transaction is worthy of tax treatment over the fluctuation of the market price of bitcoin, the United States government is essentially begging to make a swath of technologists tax cheats by accident.

The order found that Coinflip conducted activity related to commodity options transactions without complying with the CEA and CFTC Regulations.

“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”, it explained. The distinction matters to the extent that it dictates regulatory standards that apply to the still largely unregulated cryptocurrency.

The Order requires Coinflip and Riordan to cease and desist from further violations of the CEA and Regulations, as charged, and to comply with specified undertakings.

Under Section 4c of the Act and Part 32 of the regulations, bitcoin operators in the USA would now be required to be registered as a Swap Execution Facility or a Designated Contract Market.

The Coinflip exchange began offering Derivabit, a platform for trading Bitcoin options and futures contracts, in March 2014.

The Commonwealth Bank of Australia and a consortium of nine banks that include the Royal Bank of Scotland and Barclays are also looking at bitcoin technologies for driving global finances and for creating a secured online payment service.