A US judge has ruled that cryptocurrencies fall under the classification of commodities, making them subject to the rules and regulations set forth by the US Commodities and Futures Trading Commission (CFTC).

The ruling came about during a case where the CFTC charged two individuals and a Las Vegas-based business – called My Big Coin Pay – that used investor’s funds to fund personal expenses and luxury goods, without developing the project or advancing any of the goals set forth by the project’s original roadmap.

The CFTC’s charge against the Las Vegas-based firm and the two men, Randall Crater and Mark Gillespie, asserts that the group was siphoning investor’s funds into personal bank accounts, and that the case falls into the hands of the CFTC based on the cryptocurrency product being offered being classified as a commodity.

Initially, the defendant’s attorneys claimed that the case should be dismissed based on the grounds that the CFTC has no jurisdiction to bring about such charges, based on the cryptocurrency products not being classified as commodities.

The defendants noted that the products are not commodities because My Big Coin Pay’s product did not deal with futures contracts and deliveries, meaning that it did not fall under the Commodity Exchange Act (CEA).

The CFTC responded to this, saying:

“A 'commodity' for purposes of [the CEA definition] is broader than any particular type or brand of that commodity. Pointing to the existence of bitcoin futures contracts, [the CFTC] argues that contracts for future delivery of virtual currencies are 'dealt in' and that My Big Coin, as a virtual currency, is therefore a commodity.”

The judge ruling over this case agreed with the CFTC’s assertion, saying:

"The text of the statute supports plaintiff's [CFTC’s] argument. The Act defines 'commodity' generally and categorically, 'not by type, grade, quality, brand, producer, manufacturer, or form.'"

Previously, federal judges have made conflicting rulings, specifically in a recent case in which the federal judge ruled that ICOs, and the resulting investment products, fell under the umbrella of securities laws, making them subject to being ruled by the SEC.