CFTC Plans to Address Growing Concerns Over Cryptocurrency Trading
The Commodity Futures Trading Committee (CFTC) is moving to address industry-wide concerns over its oversight responsibilities for cryptocurrencies, the burgeoning asset class that has quickly moved into institutional investment circles.
According to The Wall Street Journal, two CFTC advisory committees will meet later this month to discuss oversight of cryptocurrency exchanges, the processing of bitcoin futures and whether the digital asset class falls under the same rules governing securities manipulation. The advisory groups consist of regulators as well as market participants.
“Ignoring virtual-currency trading will not make it go away. Nor is it a responsible regulatory strategy,” said Chairman J. Christopher Giancarlo in a statement.
The U.S. derivatives regulator has faced criticism over its handling of cryptocurrency regulation, with some investors and industry groups arguing that more needs to be done to protect consumers. These groups have been especially vocal about the CFTC’s handling of bitcoin futures, which began trading on the CBOE and CME futures exchanges last month. The growth of bitcoin futures has also led CBOE to pursue the listing of half a dozen exchange-traded funds (ETFs) tied to the digital asset.
Earlier this week, the Securities and Exchange Commission (SEC) invited the public to comment on two of the CBOE’s proposed funds. A week prior, it issued a similar call on two other ETFs put forward by the Chicago-based exchange.
Critics of bitcoin-based futures contracts argue that the new products could introduce unwanted risks into the clearing process. The Futures Industry Association (FIA) has questioned whether the CFTC could have done more to solicit public input or delay the release of the futures contracts.
In response, the CFTC has argued that “neither statute nor rule” would have prevented the likes of CME from launching their new futures products in advance of public hearings. “Even if the CFTC could have held public hearings or requested public input, it is unlikely that the outcome would have changed,” the CFTC added.
Cryptocurrencies have taken the global market by storm over the last 12 months. Currently, there are roughly 1,400 cryptocurrencies collectively valued at more than $760 billion. Analysts say the only thing stopping the market from expanding further is the regulatory uncertainty facing digital assets. South Korea recently became the latest jurisdiction to clamp down on cryptocurrency exchanges. In the United States, the SEC has already warned that it is policing the ICO market to ensure securities tokens are meeting federal securities requirements.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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