U.S. Judge Rules Cryptocurrencies Can Be Treated as Commodities

In a court case of fraud allegations against My Big Coin Pay, a federal judge ruled that cryptocurrencies can be treated as commodities, even as legal discussions over its asset status continue.

As reported by Reuters on Sept. 27, the judge ruled "Virtual currencies" fall under the jurisdiction of the Commodities Futures Trading Commision, the U.S. derivatives regulator.

The watchdog can closely monitor and take action against cryptocurrency frauds in the country, which thus far has been confined to several authorities taking independent steps.

In January 2018, blockchain entrepreneur Randall Crater founded an undisclosed company to perpetrate a $6 million fraud on unassuming investors interesting in purchasing My Big Coin-a payments-focussed cryptocurrency.

A distraught investor lodged a lawsuit against the two parties, Crater and MBC, claiming the accused named their company to sound like "Bitcoin" and misguided investors by claiming MBC tokens were backed by gold.

Crater's lawyers dismissed the cases from federal courts initially, stating the CFTC had no business over cryptocurrency fraud cases as the asset class offers no service to base futures contracts on nor is a tangible good-both factors which fall under the agency's purview.

District Judge Rya Zobel in Boston ruled MBC fell in the Commodity Exchange Act's definition of a commodity, as commodities are identified broadly by the law books, instead of adhering to specifics.

A finding in MBC's favor would have meant the CFTC loses its ability to police cryptocurrency frauds.

While the accused are yet to be trialed for their offenses, knowledge of the CFTC's understanding of cryptocurrencies is a step forward for the broader industry.

Lawyers defending MBC called out the court ruling.