Jul 11, · On July 6, the U.S. Commodity Futures Trading Commission (CFTC) announced that it had given LedgerX, an institutional digital currency derivatives trading and clearing platform the permission to create a Swap Execution Facility (SEF). It has, thereby, approved bitcoin options trading for hedge funds, CTAs, and other institutional allcryptocoins.de: Btcmanager. Last Thursday the United States Commodities Futures Trading Commission (CFTC) settled charges against a small and now-defunct operation in San Francisco called Coinflip, which marketed bitcoin. Access to CFTC's public reports and contact information for the Chief Data Officer of the agency. A breakdown of each Tuesday's open interest for markets; in which 20 or more traders hold positions equal to or above the reporting levels established by the CFTC.
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Thus, it allows users to "go long" and bet that the price of bitcoin will rise, or "go short" and bet the price will fall. Technology enthusiasts, regulators and economists have been pondering how to pigeon hole bitcoin since its emergence in In August , the German Finance Ministry classified it as a "unit of account", meaning it is can be used for tax and trading purposes in the country and is like "private money.
Skip Navigation. Markets Pre-Markets U. VIDEO Ex-Goldman director aims to hedge your bitcoin risk. Bitcoin futures market just changed the game. Related Tags. The CFTC had signaled its views on the subject nearly a year ago , and I wrote about its potential implications around the same time. For financial newbies, a financial derivative is essentially a contract to buy, sell, or pay, contingent upon the price of a something else.
More broadly, the classification also now means it is more likely the CFTC could, under its market manipulation authority, police fraudulent activities on exchanges where bitcoins — and not just bitcoin derivatives — are traded. However, the CFTC has suggested it is not particularly interested in going down that path, and in fact there may be some limits on its ability to do so without a specific connection to commodities derivatives markets. This leaves the primary impact of the enforcement action itself to be felt by companies like Coinflip, which offer bitcoin derivatives to users in the US.
Using derivatives to stabilize value is awkward on a one-off basis, but commercialized and regularized through smart contracts, it gives holders the experience of owning bitcoins with a stable price, even when the market price for bitcoins continues to fluctuate.
Recall, though, that while cooperation with an investigation is sometimes a good strategy, willy-nilly and lawyer-less discussion with government investigators almost never is. Still, this enforcement action suggests that, without something more flagrant, criminal punishment for these types of offenses is not especially likely.
Bitcoin is now officially a commodity. Even small unregistered sellers of bitcoin derivatives are wise to make plans to deal with potential enforcement actions.
Washington DC image via Shutterstock. This is not legal advice, and is not intended to establish an attorney-client relationship. You can reach Jared at jmarx hwglaw.