“Virtual currencies,” such as bitcoin and ether, qualify as “commodities” under the Commodity Exchange Act (“CEA”). The extent that such products are subject to regulation by the U.S. Commodity Futures Trading Commission (“CFTC”) depends upon whether the products are traded in the spot (or cash) market, on a forward basis, or as the underlying of a futures or swap contract.
A spot transaction is an exchange of a commodity for payment where immediate delivery and payment for the commodity is typically expected to occur on or within a few days of the transaction date. A forward transaction is an exchange of a commodity for payment where the commodity is intended to be physically delivered to the buyer rather than to solely transfer price risk but the delivery is deferred to a later date for reasons of commercial convenience or necessity. Spot and forward transactions are typically subject only to the anti-fraud and anti-manipulation provisions of the CEA and CFTC’s regulations.