Why Regulate Commodities?

Abstract

This Article examines the federal regulatory regime for commodities and the theories and purpose to their regulation. At the onset of federal commodities regulation in 1922, only futures on specified agricultural commodities were regulated. Today, the federally-defined term "commodity" could mean nearly any good, article, or service in the world, and the implications go well beyond futures to products such as options, swaps, and even spot market transactions. Before 1974, commodity was defined such that the only federally-regulated commodities were those specifically enumerated by statute. The revised 1974 federal commodity definition, due to its open-ended nature, has been interpreted as potentially including every good, article, and service imaginable. That interpretation combined with a prohibition on trading futures other than on a federally-regulated futures exchange has dramatic implications.

Keywords: commodities, derivatives, CFTC, SEC, crypto, digital assets