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CFTC to Discuss Bitcoin Futures Self-Certification Issue



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Two committees of the U.S. Commodity Futures Trading Commission will stage meetings regarding digital currency matters, including the self-certification process utilized to ratify new cryptocurrency derivatives products.

In a statement, CFTC chairman J. Christopher Giancarlo stated the commission’s technology advisory committee would review how virtual currencies could be used broadly.

The market risk advisory committee on the other hand, would hold a meeting on the self-certification process for new products and rules surrounding the product’s markets.

Last month, a few days after futures exchanges CME Group and the Cboe said they would launch bitcoin futures contracts, the Futures Industry Association (FIA), said its members were anxious about having to pay for outstanding contracts caused by bitcoin’s price changes.

The group’s role is to act as a safety net for when a company cannot pay out its contracts.

At the time, the FIA said a public discussion should have happened before allowing either CME Group or the Cboe to fulfill self-certification procedures due to bitcoin being a non-standard product.

While Giancarlo did not report any expectations from the meetings in terms of new regulatory policy proposals, he said “the responsible regulatory response to virtual currencies is consumer education, asserting CFTC authority [and] surveilling trading in derivative and spot markets,” among other actions.

Giancarlo said the CFTC is “cognizant” of the hazards that come with virtual currencies, specifically referring to bitcoin when saying:

“In addition to the nascent stage of the technology itself, risks associated with virtual currencies include: operational risks of unregulated and unsupervised trading platforms; cybersecurity risks of hackable trading platforms and virtual currency wallets; speculative risks of extremely volatile price moves; and fraud and manipulation risks through traditional market abuses of pump and dump schemes, insider trading, false disclosure, Ponzi schemes and other forms of investor fraud and market manipulation.”

Giancarlo added:

“One thing is certain: ignoring virtual currency trading will not make it go away.

“Nor is it a responsible regulatory strategy.

“The CFTC has an important role to play.

“The CFTC seeks to promote responsible innovation and development that is consistent with its statutory mission to enhance derivative trading markets and to prohibit fraud and manipulation in connection with commodities in interstate commerce.”

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