A US federal judge has ruled that cryptocurrencies can be regulated as commodities by the Commodity Futures Trading Commission, Reuters has reported.
According to the newswire, the ruling by US district judge Jack Weinstein in Brooklyn was related to a fraud lawsuit that the CFTC had brought against New York resident Patrick McDonnell and his company, Coin Drop Markets. Weinstein ruled that the commission had the authority to regulate cryptocurrencies as commodities, allowing the case to go forward. The judge also entered a preliminary injunction barring the defendant and his company from engaging in commodity transactions.
"Virtual currencies are 'goods' exchanged in a market for a uniform quality and value. ... They fall well within the common definition of 'commodity'," Weinstein wrote on Tuesday.
The ruling upholds an earlier determination by the CFTC. The agency, which is responsible for the regulation of commodity, futures and derivatives markets, first determined that digital currencies are commodities in 2015. The regulator said at the time that “innovation does not excuse those acting in this space from following the same rules applicable to all participants in the commodity derivatives markets”.
In its case against McDonnell, the CFTC said that he and his company had fraudulently offered customers cryptocurrency trading advice. However, customers never received the advice they paid for and Coin Drop Markets was never registered with the CFTC, the regulator said.