The regulatory landscape for Bitcoin is becoming increasingly complicated with the Commodity Futures Trading Commission (CFTC) laying claim to jurisdiction over the virtual currency.
CFTC Commissioner Mark Wetjen is reported as commenting at a seminar organised by Bloomberg in New York that the commission has the authority to intervene with enforcement actions against price manipulation in Bitcoin markets because the virtual currency can be classified as a commodity.
With the Financial Crimes Enforcement Network (FinCen), the New York Department of Financial Services (DFS), the Securities and Exchange Commission (SEC) and the US Department of Justice (DoJ) all claiming jurisdiction over Bitcoin, it is becoming an increasingly crowded regulatory landscape.
“It can get confusing because different regulatory bodies can look at the same thing and classify it differently,” says Michael Moro, a director at SecondMarket. “The IRS says that it’s property but then the CFTC says that it could be traded as a commodity, especially if a commodity trader that they oversee starts trading Bitcoin.”
But Moro says that, rather than representing a territorial land grab by regulators, it is reflective of the US authorities’ desire to ensure that no aspect of Bitcoin falls through any regulatory cracks. “They don’t want there to be a situation where something happens with a firm dealing in Bitcoin and there’s no one there to properly regulate what is happening,” he says.
Evan Greebel, a partner at Katten Muchin Rosenman, says that while there will be instances of regulations overlapping each other the increased regulation around virtual currencies is a good thing.
"Regulation is a good thing in the space. Regulation will cause nefarious actors to either not open up shop in the US or be quickly closed. It will allow legitimate businesses, well financed businesses and businesses that are complying with the US and state law to exist and flourish. Regulation will also give comfort to investors in the space that Bitcoin and virtual currencies are legitimate and that the mechanism for storing and buying Bitcoins will be legitimate," he says.
Greebel adds: "The US regulations will allow the emergence of one or more US exchanges, which is good for the consumers, whether they are individuals, funds, high net worth investors or banks."