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Ex-CFTC Chief: Even Republicans Are Pushing for Crypto Regulation

Bitcoin seems to be testing politicians across all aisles.

In fact, even members of the U.S. political party known for its broad opposition to regulation have been embracing the idea the market needs greater oversight, according to former Commodity Futures Trading Commission (CFTC) commissioner Bart Chilton.

And Chilton has the experience that would make him a credible source.

In his role at the CFTC, Chilton was known for his aggressive stance against fraud and was among the first regulators to openly talk about the potential need to regulate bitcoin. Indeed, as far back as 2013, Chilton had begun considering the need for government oversight of cryptocurrency. As a possible nod to Chilton’s concerns, just a year after his final term ended, the CFTC officially deemed bitcoin a commodity.

While regulatory guidance is typically viewed by many in the cryptocurrency industry as a negative, the technology’s status as a commodity helped set the stage for the regulated bitcoin futures that would give the cryptocurrency more mainstream appeal.

And now, Chilton, a Democrat, is watching as the GOP is coming around to his viewpoint on crypto regulation. Case in point, just a few months after U.S. Representative Ron Paul (Texas, R) told state regulators to “stay out” of cryptocurrency, other Republicans, including South Dakota Senator Mike Rounds, began publicly espousing the benefits of regulation in this area.

In an in-depth interview with CoinDesk, Chilton discussed how the value of bitcoin and the cryptocurrency markets, in general, is influencing this ideological shift.

“The value gets so large that there might be a contagion into the largest financial institutions,” Chilton said. “And all of a sudden people’s bank accounts get wiped out because of the fear of missing out, and they invest their retirements when they shouldn’t.”

Chilton continued:

“Maybe it’s stupid, but that starts to make people say, ‘This could have a larger impact on the investors.'”

The magic number

At the top of Chilton’s list of reasons why Republicans are worried about cryptocurrency now is a single number: $20,000. It was that price, which bitcoin flirted with in December, that Chilton believes made Republicans do a double-take.

Before then, according to Chilton, most political leaders viewed cryptocurrency as a periphery concern, overshadowed by other more pressing matters.

“These congressman and senators have 300 issues they have to worry about. They’re dealing with infrastructure and the budget deficit and agriculture — a zillion things — the FCC and trade and war and oh my gosh,” Chilton said, adding:

“I think when bitcoin hit $20,000 and as it was going up, people started saying, ‘Something is happening here, and we’ve got to pay attention.'”

As the market frenzy drove bitcoin’s market value up above $300 billion, Chilton said politicians, for the first time, began to imagine — and worry about — an economy if the price never came down. And he describes how elected officials then began scrambling to learn about bitcoin and the broader cryptocurrency space from any source they could, including each other, culminating in the first-ever Senate hearing on cryptocurrencies in February.

What Chilton said was most remarkable about the event was that normally, speakers and other members of the audience only stay through a small portion of the proceeding, but during the cryptocurrency hearing, the majority of people stayed through the entire thing.

And two weeks later, Republican’s tone around regulation began shifting.

For instance, Reuters reported that Republican Congressmen Bill Huizenga of Michigan, Tom MacArthur of New Jersey and Dave Brat of Virginia joined Senator Rounds — also an influential Senate Banking Committee member — in support of crypto regulation.

Referring to Senator Rounds, Chilton said, “It was significant because this is a guy who is a free market Republican.”

Who’s regulating who? 

However, as Republicans increasingly seem interested in abandoning their position on regulation when it comes to cryptocurrency, uncertainty remains about what rule-making for the industry will look like.

In bitcoin’s early days, enthusiasts were keen to describe the cryptocurrency as unregulated and unregulatable, and in certain ways, they could be right. But increasingly, it’s become popular for legislators, regulators and industry stakeholders to point to existing regulations for traditional products as a means by which to regulate at least the companies that provide consumer-facing services.

Still, what has become clear, especially after the Senate hearing, is that there’s still confusion over which government agency has enforcement powers over this new industry.

Either way, though, Chilton argues that regardless how that all shakes out, the best path forward for cryptocurrency startups is being very open with regulators and doing their best to comply with any rules they think do apply to their business model.

In an effort to help, Chilton became an adviser of ethereum startup Omega One, which is building a compliant cryptocurrency exchange. The company is part of a new wave of startups taking preemptive action in an effort to satisfy regulatory concerns.

Speaking to his approval of those startups’ decisions, Chilton concluded:

“I always thought it’s better to work with the government and fine-tune where they are to move forward, than to just hope something happens, and then you’re over-regulated.”

Bart Chilton image by Michael del Castillo

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Interested in offering your expertise or insights to our reporting? Contact us at news@coindesk.com.

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Ex-CFTC Commissioner Joins Crypto Exchange as Regulatory Adviser

Bart Chilton, the former commissioner of the U.S. Commodity and Futures Trading Commission (CFTC), is doubling down on his stated desire for a regulated market to foster the development of cryptocurrency trading.

The former U.S. government regulator announced on Jan. 23 that he will join the decentralized cryptocurrency exchange Omega One as an advisor, focusing on regulatory aspects in the U.S. and abroad as the exchange eyes attracting retail and institutional investors.

In an email response to CoinDesk, Chilton explained that one of the reasons he signed up for the new role is because the team at Omega One also shares the belief that appropriate regulation should be in place to facilitate the growth of cryptocurrency trading.

“We [Alex Gordon-Brandor, CEO of Omega One, and Chilton] spoke for a while and [Gordon-Brandor] explained how Omega One wanted to break the mold of most in the digital world of staying away from all things regulatory or government like a hot oven. He said we need transparency and disclosure and to abide by appropriate rules,” Chilton explained.

In addition to advising on regulatory issues, Chilton said he is keen on the Brooklyn Project, a cross-industry regulatory endeavor for the crypto space launched by blockchain tech firm ConsenSys, which is also a partner of the Omega One.

The news marks a notable move by a former government regulator to take part in shaping the development of cryptocurrency trading by taking his previous experience in pushing through regulations to the emerging industry.

Serving at the CFTC from 2007 to 2014, Chilton held a strong position in enforcing market regulation and implementing position limits in bid to protect investor benefits. He also openly opposed the legislative delay of the Dodd-Frank act, which was enacted for investor protection in response to the 2008 financial crisis.

Previously, Chilton has made comments arguing that, while the U.S. should embrace the potential of cryptocurrency and blockchain technology, he believes proper regulations are needed for a sustainable growth of the industry, especially when it comes to protecting investors. Another issue that regulation may solve, as he has suggested, is the notorious volatility of bitcoin’s price.

Bart Chilton image via CoinDesk archives

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.

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Ex-CFTC Commissioner Bart Chilton: Bitcoin Isn't a Scam

Former U.S. trading commissioner Bart Chilton has said that bitcoin is “not a scam or fraud,” according to a news report.

Talking to Fox Business, Chilton made his comments in response to former Federal Reserve chairman Alan Greenspan who raised concerns on the sustainability of bitcoin last week – reportedly stating that cryptocurrencies do not have any “backing.”

Chilton said:

“I don’t think it’s, you know, a fraud, like [JPMorgan CEO] Jamie Dimon said, or a pyramid scheme like [Russian] President Putin said, I mean, people are actually using bitcoins to purchase things. So, that’s not a scam or a fraud.”

“I do think it’s sustainable, I don’t know if it’s sustainable at these prices,” he told the news channel.

Elsewhere in the interview, Chilton, who was commissioner at the U.S. Commodity Futures Trading Commission from 2007–2014, expressed the hope that bitcoin regulations will bring some protections for consumers but will not be “overly zealous.” He added that CME Group’s plans to launch bitcoin futures by the year’s end will bring needed regulations to the space.

His statements come soon after European Central Bank president Mario Draghi said that cryptocurrencies are too “immature” to be considered for regulation.

Bart Chilton image via Mathew Greenfield/YouTube

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.

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Former CFTC Commissioner: Regulation Would Solve Bitcoin Volatility

A former US markets regulator says he is concerned by the volatile prices seen in cryptocurrency markets – and that he believes regulation can solve the issue.

Writing for CNBC, Bart Chilton – who served as a commissioner for the Commodity Futures Trading Commission (CFTC) from 2007 to 2014 – wrote today that big fluctuations in the price are worrisome. Earlier this month, bitcoin shot above the $5,000 mark, subsequently tumbling amidst a spate of bad news developments. At press time, the price of bitcoin is trading at around $3,651, according to the CoinDesk Bitcoin Price Index (BPI).

The jumps in price, in particular, should serve as a warning to users that bitcoin’s price may being artificially inflated, Chilton argued.

He wrote in the piece:

“There’s no questions – zero – that had digital currencies been regulated, I would have sought an investigation into the precipitous price changes we’ve witnessed.”

Chilton ultimately concluded that, in his view, “money will be digitized” and cryptocurrency will be part of that process. At the same time, he called for advocates for the tech to proactively work with regulators – before they go ahead and make their move first.

“Rather than waiting for governments to take actions that thwart the development of digital currencies, [digital enthusiasts] should lead efforts to put in place appropriate regulatory oversight for these new and innovative financial technologies,”  he wrote.

His op-ed comes more than a year after Chilton, who worked in both the Clinton and Obama administrations, called on then-President Barack Obama to launch some sort of regulatory framework to oversee cryptocurrencies.

Image via BartChilton.com

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at [email protected].