CFTC seeks to expand regulation of Bitcoin

May 9th, 2013

In the past, I have blogged about the Commodity Future Trading Commission’s broadening scope of their own enforcement jurisdiction, as empowered by Dodd Frank. The CFTC has deemed politicla prediction markets, which involve only opinions and no actual items, as if they were contracts on physicla commoditie (such as gold or silver or oil). Now, the CFTC is looking to get involved wtih Bitcoin.

The Commodities Futures Trading Commission is reportedly ‘seriously’ exploring whether volatile cyber currency Bitcoin may fall under the U.S. regulator’s purview.

The potential regulatory oversight from the CFTC poses a serious threat to Bitcoin, which has enjoyed a surge of new attention and an explosion in value in recent months amid concerns about traditional bank deposits and currencies.

Bitcoin “is for sure something we need to explore,” Bart Chilton, one of the five commissioners at the CFTC, told the Financial Times. A source told the paper that the regulator, which gained new powers thanks to the Dodd-Frank legislation, is “seriously” examining the issue.

“It’s not monopoly money we’re talking about here — real people can have real risk in these instruments, and we need to ensure that we protect markets and consumers, even in what at first blush appear to be ‘out there’ transactions,” Chilton told the FT.

By regulate, the CFTC means ban. The prohibitory costs of registering with the CFTC would likely render Bitcoin impossible to run in the United States, similar to the rules imposed on InTrade. Stay tuned.