Crypto Exchange Bakkt CEO: Right Regulation Could Help Market Flourish

Kelly Loeffler, head of the upcoming US trading platform, made the remarks during the ongoing CFTC fintech conference in Washington.

The right level of regulation can go hand-in-hand with and help new technologies like cryptocurrency, Kelly Loeffler, the chief executive officer (CEO) of forthcoming US cryptocurrency exchange Bakkt, said on Wednesday. Loeffler was one of the speakers during the first day of Fintech Forward 2018, the annual Commodity Futures Trading Commission (CFTC)’s conference that focuses on the challenges and opportunities of new technology including blockchain and virtual coins.

Regulators and crypto companies can work together to provide a safe ecosystem for investors like in the energy sector in 2002-2003, a move that led to security and growth in this market, Loeffler said. CFTC and Securities and Exchange Commission (SEC) should focus on bringing more clarity and end regulatory arbitrage in the virtual coin industry, the exchange boss added.

"We all can acknowledge [attendees in the conference] that with regulation, markets can safely innovate and flourish," Loeffler said.

Bakkt, which is a project of the New York Stock Exchange (NYSE) owner IE, should start next month. The platform decided to offer physically-based Bitcoin (BTC) futures because it wants to target institutional investors with regulated crypto products and the company is still in the process of CFTC approval for these contracts, Bakkt boss explained.

Loeffler was one of the five speakers during the panel “Crypto Assets and Markets” along with Richard Gorelick, head of market structure at DRW, a company that owns crypto OTC provider Cumberland and has recently invested in the upcoming virtual coin exchange ErisX.

According to Gorelick, some of the practices of stock market regulation could be used in crypto space, but the fintech industry can also offer by itself new ways for oversight. The crypto industry should step in because self-regulation can fill existing legal gaps and thus, bring trust in the digital currency market.

On the other hand, state approach should be “smart,” Gorelick explained and added that disclosure provisions to crypto exchange owners could be proper provisions as there is no information about the owners or policies of some of the existing trading venues.

"We need smart regulation not just to protect investors and consumers in the space which is essential but also to clear the way for the responsible market participants to invest and build in this [crypto market]," DRW executive told attendees.

Peter Van Valkenburgh, Director of Research at the NGO Coin Center, Chris Brummer, Director, Institute of International Economic Law Georgetown, and John Pfeffer, entrepreneur and investor also took part in the roundtable. All three men explained that one of the challenges for the crypto market in the US is the fragmented regulatory environment with several market and consumer protection agencies on the federal level along with dozens of regulators for every state.