In a recent speech, U.S. Commodity Futures Trading Commission (CFTC) Chairman J. Christopher Giancarlo pledged the CFTC’s support to allow for market forces— and not regulatory hindrance— to determine the “appropriate value of bitcoin”.
The CFTC’s Stance on Crypto Regulations Explained
Speaking at the Eurofi Financial Forum in Bucharest, Romania on April 4th, Giancarlo described the importance of regulatory cooperation between the United States and the European Union.
More specifically, the chairman emphasized the commission’s task to monitor— but not impede the development of the digital asset space.
He described how the CFTC has a mission of simplifying its own rules and regulations, to make them less burdensome and more financially manageable for market participants.
In this sense, Giancarlo explained the commission’s positive approach to digital asset derivatives products:
“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 like bitcoin futures, which have proven invaluable in letting market forces determine the appropriate value of the bitcoin.”
The comment was likely a response to a research paper from the Federal Reserve Bank of San Francisco. Published in May 2018, the paper claimed that Bitcoin futures trading— which was given the green light by the CFTC— was responsible for Bitcoin’s sharp decline in value back in early 2018.
However, Giancarlo has publicly stated that the CFTC’s authorization of Bitcoin futures trading is reflective of their agenda to prioritize market-based solutions for innovation.
The Increased Involvement of Regulatory Authorities in the Digital Asset Space
Chairman Giancarlo’s remarks have come as a surprise to some given the recent increase of regulatory authorities in the digital asset sector.
The CFTC for example recently fined 1pool Ltd and its CEO with a $990,000 penalty due to unregistered bitcoin transactions.
The Securities and Exchange Commission (SEC) has also fined both exchanges and ICOs for failing to satisfy various securities registration requirements.
Out of a concern for regulatory clarity and safety, the digital asset industry has started turning to the Security Token Offering (STO) as a compliant means to raise capital.
So far in 2019, STOs have increased by 130% when compared to Q4 2018.
Yet in his speech, the CFTC regulator reflected a firm stance of advocating for digital asset innovation, as requested on numerous occasions by US Congressman Warren Davidson.
In looking towards the future of regulation, Giancarlo emphasized the need for the US and the EU to collaborate on a regulatory strategy which will lead to greater access to foreign markets:
“Both European and U.S. policymakers have a common interest to make our respective markets the most effective places to trade and to do business. They should be neither the least, nor the most, prescriptively regulated – but the best regulated for the unique characteristics of our marketplaces, balancing market oversight, health and vitality. This goal will not be achieved by setting up regulatory barriers and separating ourselves from our foreign counterparts, but by removing the barriers that stand in the way of global market participants choosing the best markets for their needs….In this respect, regulatory and supervisory cooperation should lead to greater access to each other’s markets.”
What do you think of CFTC Chairman Giancarlo’s remarks? What do you think the future of CFTC regulation looks like for digital assets? We want to know what you think in the comments section below.
Image courtesy of C-SPAN.