If an asset is a commodity, then the CFTC’s regulatory and enforcement authority applies to commodity interest activity related to the commodity (e.g., futures or swap trading for the commodity), and the CFTC has the ability to pursue manipulative and fraudulent activity in the underlying commodity markets (e.g., manipulative activity in the spot and forward markets for the commodity).
The CEA defines the term “commodity” broadly. In particular, CEA Section 1a(9) defines a commodity by referencing specific enumerated commodities such as cotton and soybeans, along with the following broad catch-all language: “and all services, rights, and interests […] in which contracts for future delivery are presently or in the future dealt in.” 7 U.S.C. § 1a(9) (2021). The definition of a commodity explicitly excludes onions and motion picture box office receipts from the definition.
The CFTC has taken the view that the definition of a “commodity” effectively means that any service, right or interest for which a futures contract exists, or could exist in the future, qualifies as a commodity. The CEA classifies commodities into three categories: (i) “agricultural commodities” (ii) “excluded commodities”; and (iii) “exempt commodities.” An exempt commodity is any commodity that is not an agricultural commodity or an excluded commodity.
- Examples of agricultural commodities include enumerated products, such as wheat, cotton, corn, soybeans, tobacco and livestock. Additionally, the definition of agricultural commodity includes “[a]ll other commodities that are, or once were, or are derived from, living organisms, including plant, animal and aquatic life, which are generally fungible, within their respective classes, and are used primarily for human food, shelter, animal feed or natural fiber.” See 17 C.F.R. § 1.3, Agricultural commodity.
- Excluded commodities include enumerated financial instruments, such as, interest rates, exchange rates, currencies, securities, indices, and contingencies and events, among other listed commodities. See 7 U.S.C. § 1a(19).
- An exempt commodity is any commodity that is not an agricultural commodity or an excluded commodity. Examples of exempt commodities include energy products (g., oil, natural gas, environmental carbon offsets) and metals (e.g., gold, silver).
The CFTC has also taken the view that certain digital assets such as bitcoin and ether qualify as a commodities. See e.g., In re Coinflip, Inc., No. 15-29 (CFTC Sept. 17, 2015) (“Bitcoin and other virtual currencies are encompassed in the definition [of “commodity” from the CEA] and [are] properly defined as commodities.”); CFTC Press Release Number 8051-19 (Oct. 10, 2019) (referencing Chairman Heath P. Tarbert’s statement at the Yahoo! Finance All Markets Summit: “It is my view as Chairman of the CFTC that ether is a commodity, and therefore it will be regulated under the CEA.”).