If cryptocurrencies are a commodity, can they interact with oil trading?

Amid the rise of virtual currencies, the US Commodity Futures Trading Commission (CFTC) declared cryptocurrencies to be commodities, thus indirectly stating that they were not currencies or investment vehicles, but crypto-commodities that could be tradable in the real or virtual world with exclusive tokens.
A little bit of history: The CFTC defined Bitcoin and other virtual currencies (cryptocurrencies) as commodities under the US Commodity Exchange Act in late 2014.
The CFTC has always enforced its principles — to prosecute fraud, abuse, manipulation, or false solicitation in markets for virtual currency derivatives and underlying spot trading. However, cryptocurrencies have had a transformational impact on CFTC-regulated markets and the agency itself.
Crude oil and its derivatives are the most actively traded commodities in the world, where there is a certain cost associated with their exploration, production, refining and use. Also, the physical market prices are linked to the price movement of futures markets.
Crypto-commodities work similarly, as there is a cost associated with generating and using them. This has raised some argument that cryptocurrencies represent the future of global commodity trading, and this might include oil since it is the most prominently traded commodity.
As there is an inverse correlation between the dollar and the price of oil, once the dollar weakens or declines, oil prices move in the opposite direction. However, the correlation between cryptocurrencies and oil markets is not fully realized, since oil is influenced by many emerging market countries.
Cryptocurrencies are inversely correlated with fiat (government-issued) currencies and the dollar is the main currency for commodities.
There is huge technical resistance in the global economy not to dethrone the dollar by keeping a consistent monetary policy and economic stability.
Besides this, increased risk aversion, in view of what has happened recently in the stock markets and the massive slump in so-called cryptocurrencies, is very much unlikely to weigh on oil trading even if it is considered a commodity.
Since cryptocurrency markets are perceived as commodity markets, the huge moves in cryptocurrency prices are not unusual and these digital coins are known for their volatility. But they are not able to reflect their volatility in oil markets.
The highlighted fragility of current commodities’ price movements and the dependence on monetary policy (the inflation response from the US Federal Reserve, dollar movements and interest rate movements) make it impossible for cryptocurrencies to effectively contribute to the oil futures market, especially for hedging purposes.
We all remember what happened to Elon Musk when he accepted Bitcoin as a form of payment for his Tesla vehicles, then two months later withdrew his support and caused Bitcoin to drop $24,000 in a week.
What does that have to do with oil supply and demand?
In my opinion, there is a lot of hype around cryptocurrencies. They represent the new thing in town and a lot of investors seem to like them. Sure, there will always be people interested in this type of risky investment but there will be huge reservations about cryptocurrencies, let alone using them for oil hedging purposes.
Obviously, some countries have banned cryptocurrencies because there is no central bank that controls them, in addition to the fact that they don’t pay dividends and are too risky to invest in.
Regulators would like to get their hands on it but have so far failed. Cryptocurrencies proved that they can’t do what the fiat currencies do, and this is a huge misdirection.

• Faisal Faeq is an energy and oil marketing adviser. He was formerly with OPEC and Saudi Aramco. Twitter: @faisalfaeq