US Commodities Regulator Beefs Up Bitcoin Futures Review

The Commodity Futures Trading Commission
(CFTC) is developing a "heightened review
process" for cryptocurrency futures though it
will continue to allow exchanges to self-certify
products, Chairman J. Christopher Giancarlo
announced last week.
As reported by Reuters , Giancarlo introduced
a checklist during a conference speech in
Florida pertaining to Designated Market
Contracts (DMCs) and Derivatives Clearing
Organizations (DCOs). The aim is to assist
regulators as exchanges introduce new
products around cryptocurrencies into the
market.
The chairman's speech came after some
pushback tied to the CFTC's handling of the
December launch of bitcoin futures by the
Cboe Global Markets and the CME Group,
after which the Futures Industry Association
(FIA) expressed concern over potentially
having to pay for outstanding bitcoin futures
contracts caused by the cryptocurrency's
volatility. The Association claimed it wasn't
sufficiently included in the process and
criticized the Commission for allowing
exchanges to self-certify their futures
products.
Giancarlo's checklist requires that DMCs
set "exchange large trader reporting
thresholds at five bitcoins or less". It also
mandates that they must enter into
"information sharing agreements with spot
market platforms to allow access to trade and
trader data" in addition to agreeing to
frequent communication with the CFTC
regarding trade activities.
Beyond such measures, the CFTC will leave the
self-certification process alone, according to
Giancarlo.
He was quoted as saying:
"The CFTC's current product self-
certification framework is consistent
with public policy that encourages
market-driven innovation that has made
America's listed futures markets the envy
of the world. Whatever the market
impact of bitcoin futures, I hope it is
not to compromise the product self-
certification process that has served so
well for so long".
Others have been scrutinizing the process as
well, including some members of the U.S.
Congress.
Yesterday, top Senate Agricultural Committee
members sent a letter to Giancarlo requesting
information on the CFTC's oversight of bitcoin
futures and options markets. The senators
specifically requested information regarding
the Commission's market surveillance and its
implementation of safeguards against bitcoin's
volatility.
"American taxpayers deserve strong
safeguards against fraud, manipulation, and
abusive practices in the futures and options
markets," the letter stated. "The CFTC plays a
critical role in protecting customers and the
markets from harm."