Many institutions are looking into whether bitcoin could be used for making secure online payments and to drive global finance in general
The digital currency known as bitcoin has been given official commodity status by the United States Commodity Futures Trading Commission (CFTC). Transactions using bitcoin must now comply with all CFCT standards and government legislation. Operators are urged to register immediately to ensure that their companies are valid under trade laws and regulations.
“In the Order, the CFTC for the first time finds that bitcoin and other virtual currencies are properly defined as commodities,” said the CFTC’s decision.
The decision places the cryptocurrency under Section 4c of the Act and Part 32 of the regulations, meaning bitcoin operators in the US must now be registered as a Swap Execution Facility or a Designated Contract Market.
“While there is a lot of excitement surrounding bitcoin and other virtual currencies, innovation does not excuse those acting in this space from following the same rules applicable to all participants in the commodity derivatives markets,” said Aitan Goelman, CFTC director of Enforcement.
Other countries have already allowed bitcoin use to be legally treated as barter. Indeed, many banks including Barclays, the Commonwealth Bank of Australia (CBA), and the Royal Bank of Scotland, are investigating whether bitcoin could be used for making secure online payments and to drive global finance in general.
“These technologies have the potential to change the way we view not just payments, but business processes,” said David Whiteing, CBA chief information officer. “We also believe it will help and develop innovations we can’t yet even think of.”
Some scoff at the bitcoin phenomenon, pointing to its great depreciation in value over the last year. Yet the Australian digital bitcoin mining company DigitalBTC is still interested.
“Investors should of course remember that movement in the bitcoin price has little bearing on the technology and the digital currency revolution, of which we are a leading participant,” said Zhenya Tsvetnenko, executive chairman at DigitalBTC.
Bitcoin is operated by Coinflip based in San Francisco, California.