May 01, 2018 Substantive Law

Federal Judge Adopts CFTC Position That Cryptocurrencies Are Commodities

By James Joseph Benjamin Jr., Jan-Paul Bruynes, Peter I. Altman, Nicholas C. Adams, and Kelly Handschumacher

Reprinted with permission from Business Law Today, April 20, 2018. ©2018 by the American Bar Association. Reprinted with permission. All rights reserved. This information or any or portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.

A New York federal judge held that virtual currencies are commodities that can be regulated by the Commodity Futures Trading Commission (“CFTC”), enjoining the defendants, an individual and affiliated entity, from trading cryptocurrencies on their own or others’ behalf or soliciting funds from others, and ordering an expedited accounting. CFTC v. McDonnell, No. 18-cv-0361, Dkt. 29 (E.D.N.Y. Filed Jan 18, 2018). While the CFTC announced its position that cryptocurrencies are commodities in 2015, this case marks the first time a court has weighed in on whether cryptocurrencies are commodities. Having answered that question in the affirmative, the court went on to hold that the CFTC has jurisdictional authority over defendants’ alleged cryptocurrency fraud under 7 U.S.C. § 9(1), which permits the CFTC to regulate fraud and manipulation in underlying commodity spot markets.

Premium Content For:
  • Solo, Small Firm and General Practice Division
Join - Now