Bitcoin’s surge prompts U.S. action

Bitcoin’s meteoric rise has moved it out of the shadows of finance. The latest sign that its becoming part of the mainstream came Friday when a key U.S. agency proposed that trading be regulated much like other commodities.

Specifically, the U.S. Commodity Futures Trading Commission made clear to market participants that there could be penalties if they can’t show buyers can take physical control of purchased digital coins in 28 days — a framework that already applies to wheat, oil and gold.

The long-existing rules that require traders and exchanges to be able to deliver physical commodities has sowed some confusion for bitcoin because it’s an asset class that exists only in cyberspace. What makes the issue even more complicated is that many investors are amplifying their bets with margin, or borrowed money.

Bitcoin has jumped more than 1,700 percent in 2017, captivating everyone from retail investors to Hollywood celebrities. The digital currency has advanced 82 percent this month alone, a rise fueled by the trading commission’s decision to allow bitcoin futures to begin trading on exchanges run by CME Group Inc. and Cboe Global Markets Inc.

In its proposal, which the trading commission will seek public comment on for 90 days, the regulator said that if a trader can’t take possession of a virtual currency bought on margin within about a month, the transaction will be treated as a futures contract. Futures contracts are subject to strict trading commission oversight, and failing to register them could subject firms to fines.