Regulators from the U.S. Commodity Futures Trading Commission (the CFTC) have determined that Bitcoin and other virtual currencies should be considered a commodity covered by the Commodity Exchange Act just like oil or gold.
As a result, if a company wants to run a Bitcoin trading platform it must register with the CFTC and comply by its rules.
In a statement, Aitan Goelman, Director of Enforcement for the CFTC, stressed that “while there is a lot of excitement surrounding bitcoin…innovation does not excuse those acting in this space from following the same rules applicable to all participants in the commodity derivatives markets.”
While these remarks were targeted at a specific company, Coinflip, the implications are far reaching and could impact the innovation we are seeing in the Bitcoin space.
The real issue is whether the Internet we know today would have evolved the way it did if it had to deal with government regulation.
While regulation is inevitable in the Bitcoin space, the important issue is that government regulation needs to strike a balance between regulations that protect consumers and those that stifle innovation.