The CFTC, or Commodity Futures Trading Commission, is an independent American federal agency founded in 1975. It is the equivalent of the SEC for the stock exchanges where commodities are processed: the famous “commodities”. This includes futures (derivatives, futures), swaps (commodity derivatives) and certain types of options. In recent years, the CFTC has been studying the case of Bitcoin and cryptocurrencies …
Its field of action: “commodities”
The mission of the CFTC is of favor of open markets, transparencies, competitive and financially solid.
To fulfill this objective, it applies the rules of the Commodity Exchange Act (“CEA”). Its exclusive jurisdiction relates to any transaction “for the contract of sale of a product with a view to future delivery”.
Therefore, the raw materials are generally subject to rules CEA.
In addition, market players “commodities”(Traders, advisers, brokers, stock exchanges, etc.) are subject to registration requirements with the CFTC, as well as coercive actions brought by the CFTC for rule violations and regulations in terms of fraud and of handling.
The CFTC, udo some vision of Bitcoin, ETH and cryptocurrencies
Speaking at the Yahoo! All Markets Summit Finance in October 2019, the president of the CFTC, Heath P. Tarbert, said consider ether as a “commodity”, a commodity, and not as a title, a “security”:
“We have been very clear about Bitcoin: Bitcoin is a commodity, under the Commodity Exchange Act. We haven’t said anything about Ether – so far. As president of the CFTC, I believe that Ether is a commodity and will therefore be regulated by the CEA. And I guess you will see, in the near future, futures contracts related to Ether and other potentially traded derivatives … This is the conclusion I come to as President of the CFTC: that the Ether is a commodity and therefore falls under our jurisdiction. “
Heath P. Tarbert
For the CFTC, Ether is mainly the fuel of the platform Ethereum on which it allows you to execute smart-contracts.
According to this logic, Ether is therefore a product, a commodity. Although like Bitcoin, it has become a tradable asset, a security, it does not lose its practical usefulness, however,commodity”.
Cryptocurrencies like Ether will therefore now expect to be subject to the rules of CFTC. Actors in the cryptocurrency industry must be prepared to face constraints of conformity associated with registration requirements, fight against fraud and manipulation of CFTC.
On SEC flowerbeds
The skills of the CFTC and some DRY (Securities and Exchange Commission) overlap. On the supervision of securities, futures and swaps, the line is blurred between DRY which regulates securities and the CFTC which regulates raw materials.
These two federal supervisors have been in legal conflict since the creation of the CFTC. Bitcoin and Ethereum fall into the lap of the CFTC, because their token serves as a “vehicle”, but the DRY regulates most of the market for ICO, whose tokens generally represent a financial investment.
A future collaboration?
Tarbert also stated that the CFTC was working closely with the SEC to resolve the regulatory ambiguities on a market described as “confusing” by representatives of the two institutions. Maybe for better regulate, and so to allow, a AND F sure Bitcoin ?
Because the two institutions do not have the same vision concerning this last point. SEC Reluctant to Grant AND F on the Bitcoin whose course she judges too easily manipulable.
The CFTC, meanwhile, considers that it is possible to install a certain number of safeguards to compensate for possible manipulations. Like for example indexing a product on an index rather than on a commodity. Or use mathematics to design a contract that prevents manipulation of the index even with low liquidity.
Will the CFTC succeed in imposing its vision on Bitcoin and crypto on the SEC? The Bitcoin ETF soap opera continues, and it’s about time it ends. Bitcoiners are soon out of popcorn …
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