- April 7, 2019
- Posted by: giancarlo
- Category: Posts
The United States Commodity Futures Trading Commission (CFTC) is one of the regulatory bodies alongside the Securities and Exchange Commission (SEC) that is working on regulating the cryptocurrency sector. Calls from prominent figures such as JPMorgan CEO Jamie Dimon and Warren Buffet who believe Bitcoin does not have intrinsic value and is therefore ineffective have been made to the CFTC to, in a sense, boycott cryptos from being regulated and brought into the mainstream financial sector.
While regulatory bodies have complained about the lack of regulation in the crypto market, at the same time they have not taken any action to halt the growth of the sector. The CFCT chairman recently revealed that the commission had to resist calls to suppress the growth of the crypto space.
CFTC wants to monitor crypto, not suppress its development
CFTC chairperson, J. Christopher Giancarlo, while speaking at the EU-U.S. regulatory cooperation for derivatives markets on Thursday, April 4, stated that the regulatory body is committed to monitoring the cryptocurrency space and will under no circumstances stand in the way of its growth and development.
Mr. Giancarlo further pointed out that the CFTC fully supports the efforts made internationally to review the effectiveness of the derivatives reform agenda proposed by the G20. The reform is expected to boost the development of the derivatives market, and the CFTC chairperson is excited about this. Mr. Giancarlo noted that his agency is committed to rolling out its own rules and regulations that would be simple, less cumbersome, and less costly for market participants to adhere with the current policies and rules that are in place.
For that reason, the chairperson pointed out that the commission has adopted a positive approach while addressing new derivatives products for cryptocurrency assets and other new technologies. Mr. Giancarlo stated that “We have resisted calls to use our legal powers to suppress the development of crypto assets. […] Instead, we have favored close monitoring of market developments while not hindering the introduction of new products such as Bitcoin futures which have proven invaluable in letting market forces determine the appropriate value of Bitcoin.”
While defending his last claim, the CFTC chairperson cited the research paper published by the Federal Reserve Bank of San Francisco in May last year. According to that publication, the launch of Bitcoin futures trading on the Chicago Mercantile Exchange and the Chicago Board Options Exchange had greatly solidified the crypto derivative space. It eliminated the one-sided demand that was present in the market and enabled it to enjoy a more balanced link to inflated valuations. Mr. Giancarlo had previously maintained that the commission’s authorization of BTC futures was in line with their agenda, which is to embrace market-based solutions that would boost innovation.
The CFTC chairperson added that the creation of their fintech innovation hub, LabCFTC, was crucial as it allows them to keep tabs on transformative technological changes and market evaluations that are powered by blockchain technology and cryptocurrencies. LabCFTC has so far dedicated two of its fintech education primers to blockchain and cryptocurrencies. The first one was on virtual currencies and was carried out in October 2017 and the other one on smart contracts in November of last year. Towards the end of last year, LABCFTC asked the public and industry experts to drop comments regarding the Ethereum blockchain as it evaluates the prospect of authorizing Ethereum-based futures contracts.
The SEC and CFTC will play a crucial role in the development of cryptocurrencies in the United States. Despite calls by the crypto community and some interested parties to suppress this growing industry, the regulatory bodies are on the path to rolling out in-depth regulations and guidelines for the crypto market but they will only do so after taking the time to fully understand how the emerging market works and how best to regulate it.
The bottom line is that the cryptocurrency community would be happy to know that the CFTC chairperson is fully on-board with the development of the crypto space despite its challenges.