Cryptocurrency & Blockchain Business

U.S. Federal Court declares virtual currencies are commodities

Fresh reports from Reuters state that as per the ruling of the federal judge in the United States on Tuesday, virtual currencies like Bitcoin and Ethereum will be regulated as commodities by the Commodity Future Trading Commission.

The U.S. District Judge Jack Weinstein gave the ruling in Brooklyn and asserted that the CFTC had the position to conduct a fraud lawsuit against the New York resident Patrick McDonnell and his company Coin Drop Markets. The ruling enabled CFTC to go forward with the case and complete their inquiries.

Judge Weinstein also opened up a preparatory directive prohibiting McDonnell and Coin Drop Markets from engaging in commodity transactions. When McDonnell, who was representing himself, was approached by the media for the comment on the judgement, he refused to comment.

Notably, CFTC is the primary regulatory agency for preparing and assessing regulations pertaining commodity, futures and derivatives markets. The Primary agency had acknowledged in 2015 that virtual currencies, also known as cryptocurrencies, are commodities.

The matter was taken to the federal court and Judge Weinstein upheld the determination by CFTC on Tuesday, making it apparent that federal judicial system supported the regulatory agency’s decision to represent with the plain meaning of the word “commodity”. The court further remarked that the CFTC had ample freedom and authority to enact the federal law regulating commodities.

In its January lawsuit, CFTC had announced that beginning from about January 2017, McDonnell and his company fraudulently offered customers with trading advice on virtual currencies and further the customers never received the advice they paid for. In addition, the agency revealed that Coin Drop Markets was never registered with the CFTC, and it remarked that McDonnell ended the company’s website operations without anyone’s knowledge and stopped reverting back to customers.

It is noteworthy that cryptocurrency regulations are still in its nascent stages and the U.S. Congress has not directly passed any laws or regulations pertaining to them. However, both the CFTC and Securities and Exchange Commission (SEC) have warned the users and the government on the urgency to battle with deceptive activities in the virtual currency markets.

By applancer

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