Cryptocurrency Bubble Burst Unlikely Says Ex-CFTC Chair Now Crypto Industry Adviser

by Ted Knutson

A burst of the cryptocurrency bubble is unlikely because the industry is too immature and the big money isn’t there as institutional investors sit on the sidelines because of the regulatory uncertainty, ex-Commodity Futures Trading Commission Chair and current cryptocurrency developers, miners and exchanges adviser Jim Newsome said today.

Newsome and former SEC Commissioner Paul Atkins were to have presented a report on best practices for cryptocurrency token issuers and purchasers today at the Digital Chamber of Commerce’s annual meeting, but Newsome said the completion has been delayed for two weeks because the project is more complex than originally contemplated.

Newsome said Securities and Exchange Commission Chair Jay Clayton is probably taking a hard line on cryptocurrency because he is getting word from the White House and the Treasury Department.

Newsome warned there is global competition among regulators to oversee cryptocurrency and the U.S. agencies have to be careful they don’t run behind the rest of the world in innovation.

The SEC is taking a harder line on investor protection for cryptocurrency products than the CFTC and probably won’t approve a cryptocurrency Exchange Traded Fund (ETF) this year, NASDAQ Index Research and Product Development Head Dave Gedeon told the conference.

Congress will give the financial regulatory agencies additional authority to regulate cryptocurrency products ex CFTC Commissioner, now DTCC Global Policy Chief Mark Wetjen predicted.

DTCC processes trillions of dollars in securities transactions each day.

CME Group’s bitcoin futures trading has averaged 1.500 contracts a day with about $80 million in notional value since they were introduced December 18, CME Chief Commercial Officer Julie Winkler said at the session.

She said the futures contracts are doing well for bitcoin price discovery and risk transfer.

“That’s about what we expected,” said the futures exchange executive.