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Timothy Massad, Chairman of the Commodity Futures Trading Commission, testified before the U.S. Senate Committee on Agriculture, Nutrition & Forestry yesterday, and much to everyones surprise addressed the topic of bitcoin derivative regulation – something that has (to date) been largely ignored by policymakers and cryptocurrency enthusiasts alike.
Here are a few choice selections from the testimony (if you want to read the full testimony, you can do so here):
We also continue to respond to market developments such as new products. Virtual currencies, such as bitcoin, are an example. Virtual currencies may raise issues for a number of governmental agencies. The CFTC’s jurisdiction with respect to virtual currencies will depend on the facts and circumstances pertaining to any particular activity in question. While the CFTC does not have policies and procedures specific to virtual currencies like bitcoin, the agency’s authority extends to futures and swaps contracts in any commodity.
He went on to address the CFTCs definition of a commodity, and how this applied to digital currency:
The CEA defines the term commodity very broadly so that in addition to traditional agricultural commodities, metals, and energy, the CFTC has oversight of derivatives contracts related to Treasury securities, interest rate indices, stock market indices, currencies, electricity, and heating degree days, to name just a few underlying products.
He concluded with:
Derivative contracts based on a virtual currency represent one area within our responsibility.
Obviously regulation is a sore topic at the moment – but it is important to remember that these are derivatives we are talking about – and the fact that the CFTC is addressing digital currency as a valid part of its future infrastructure can only be a good thing…
StoneAge 
How do you regulate something ad keep it de-centralized? That is the beauty of Bitcoin and all other Crypto Currencies – they are not centralized and nigh on impossible to regulate. And by the very act of regulation make the usefulness of Bitcoin impossible because regulation equals centralization.
Banks don’t like it because they take them right out of the picture. They are not needed any more. Governments don’t like them because they are not regulateable in present form. Business LOVES them because the fees associated with peer to peer transfers are insignificant.
Bitcoin allows for the private marketplace to stay private. The way it ought to me. It’s no ones business what business someone has a stake in. Of course if you purchase public contracts (derivatives, stocks, bonds etc.) they will be regulated. A Smart contract via crypto coins is a much better regulator however. No need for the governing bodies because it is self governing.
Will there be fraud? Yes. (Like there isn’t any fraud using FED notes – Bernie Made-off come to mind) It comes back to due diligence and buyer beware. Crypto’s also protects themselves with what is called a smart contract making regulation according to the terms and condition of the agreement programmed right into the coin itself. i.e. a coin is contracted to only be spent on certain things and the terms of that sale are built in – breach of the terms ensures enforcement of the contract without any need to hire lawyers. It’s written into the coin itself.
Regulation is what got financial system into the trouble it is in to begin with. De-regulation would be the best way to go. Time for the regulators to decide they have lost this one and roll with the changes. Crypto Currencies keep things private, but the entire blockchain can be audited at any time.
Remember – Bitcoin is property, REAL property, not a currency. Yes, it is called that and can be used as such, but has not been designated so. It is NOT legal tender and NOT the property of the Federal Reserve like US banknotes and digital blips are. (no, it’s NOT your money, read “The Creature from Jeckyl Island” By G.Edward Griffin. That will open your eyes.