CFTC Boosting Efforts to Control Crypto Market, Chairman Says

The US CFTC is increasing its efforts to monitor and control the cryptocurrency market as it has grown significantly.

The US Commodity Futures Trading Commission (CFTC) is constrained to spend more on instruments for enforcement and monitoring of digital currencies and other emerging financial technology products, its chairman Chris Giancarlo said on Wednesday in a testimony to the House Agriculture Committee. The cryptocurrency market has matured and has an influence on the whole financial space, he noted.

“Emerging financial technologies are taking us into a new chapter of economic history. They are impacting trading, markets, and the entire financial landscape with far ranging implications for capital formation and risk transfer,” Giancarlo said in the testimony.

“They are transforming the world around us, and it is no surprise that these technologies are having an equally transformative impact on US capital and derivatives markets,” he added.

However, the CFTC chairman noted that investors should be aware of the high risks of digital currencies or tokens sold under the promise that they might provide future access to certain goods, services, or platform. He said that the CFTC was collaborating with the Securities and Exchange Commission (SEC) to get rid of bad actors who are involved with frauds and manipulations. Giancarlo revealed that his agency was working on a Memorandum of Understanding with the SEC to speed up the information exchange between the two regulators. Besides, the CFTC is cooperating with the US Treasury and the Financial Stability Oversight Council (FSOC) via its cryptocurrency task force and also with foreign regulators, such as the International Organization of Securities Commissions.

During the hearing, the CFTC chair said that he had been focusing on six key elements related to cryptocurrencies:

  • Staff competency;
  • Consumer education;
  • US interagency cooperation;
  • Exercise of authority;
  • Strong enforcement;
  • Heightened review of virtual currency product self-certifications.

He also touched upon a bill by Congressman Austin Scott, which would enable the CFTC to cooperate with financial technology developers on their projects, including hosting a regulatory node on a blockchain.

“[The legislation] would greatly enhance the Commission’s ability to keep pace with emerging technology, explore its potential, and facilitate its adoption,” Giancarlo noted.

Last week, the regulator called investors to be cautious and do their due diligence before investing in crypto projects.

The CFTC is responsible for the regulations of futures and options markets, while the SEC enforces securities laws concerning stock exchanges. At the same time, US regulators and lawmakers remain undecided how to classify the separate digital assets - as securities or commodities.