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…