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We are Behind the Curve When it Comes to Blockchain Technology, Says CFTC Chairman

Chairman of the United States Commodity Futures and Trading Commission (CFTC), J. Christopher Giancarlo, has said that his agency is behind the curve of matters concerning blockchain technology. The CFTC chairman also clarified the agency’s role in the nation’s financial market.

The CFTC is Four Years Behind the Blockchain Industry

Speaking during a session of the House Committee on Agriculture, Giancarlo fielded questions about the CFTC’s performance so far as well as its plans for the future. The CFTC chair spoke about the agency’s expertise with cryptocurrency and blockchain technology. According to Giancarlo, the CFTC is out of pace with the developments in the industry:

We’re falling behind. The Bank of England has announced a new blockchain compliant payment settlement system. We’re four years behind. We need to test and understand it and know how to work it as a regulator before coming to Congress. …Using subpoenas to get information from blockchain finance industry I think is the wrong way to go about it. I think cooperation is the way forward.

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Giancarlo highlighted the statutory provisions that have effectively hamstrung the Commission’s ability to keep up with the industry. He also said the CFTC couldn’t create its own blockchain protocol due to budgetary constraints. It would be recalled that financial regulators in the United States had their budgets cut earlier in the year.

CFTC Doesn’t Regulate the Retail Cryptocurrency Market

During a point in the session, Rep. Adams asked the CFTC chair whether the Commission required a Congressional mandate to oversee the cryptocurrency market. In response, Giancarlo said:

It is not the historical role of the CFTC to play this type of role in cash markets. It is not my place to advocate for expanded jurisdiction. There may come a time for the govt to step, but the question is when is the time. The total value of the crypto market is probably less than one big publicly traded company, so it’s not a big market. [I think] we should follow the regulation template of the early internet which was ‘first, do no harm.’

Do you think the CFTC can catch up with the rapid pace of development in the blockchain technology and cryptocurrency market? Should the CFTC be given oversight authority over the retail cryptocurrency trading market? Keep the conversation going in the comment section below.

Image courtesy of Reuters.


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CFTC's Giancarlo: US and Foreign Regulators Teaming Up on Crypto

U.S. regulators are working with their counterparts overseas to combat cryptocurrency fraud, Commodity Futures Trading Commission (CFTC) chairman J. Christopher Giancarlo said Wednesday.

Speaking during a U.S. House of Representatives committee hearing on his agency’s forthcoming budget, Giancarlo said he has spoken about the issue with the International Organization of Securities Commissions (IOSCO), as well as regulators in Europe, according to Forbes.

The collaboration has seen the CFTC working with domestic agencies like the Securities and Exchange Commission as well as officials in the Treasury Department, which earlier this year detailed the work being done by a group focused on enforcement issues.

Giancarlo’s reported comments are notable, given the proactive approaches that have been taken by these agencies, with the CFTC itself scoring a win this week when a U.S. district judge ruled that cryptocurrencies are commodities on Tuesday – all but confirming the position it staked out back in 2015.

The hearing notably featured a critique by Representative Rosa DeLauro (D-CT) on the attention paid by the CFTC to cryptocurrency issues, which she argued weakens other, more developed markets. Giancarlo responded that would-be investor, particularly young ones, face risks that warrant attention.

Image via CFTC/YouTube

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CFTC Gives Employees Permission to Trade in Cryptocurrencies

The U.S. Commodities Futures Trading Commission (CFTC) has reportedly given its employees permission to invest in digital currencies.

In a report from Bloomberg, CFTC workers are only allowed to trade in the market as long as they haven’t received insider information and they can’t purchase them on margin. Investing in Bitcoin futures is also a no-go area under the CFTC’s ethics guidance.

According to an employee memo, Daniel Davies, the agency’s general counsel, said that the guidelines were being issued after the ethics office had received ‘numerous inquiries’ about whether investing in cryptocurrencies was allowed.

Erica Richardson, a spokeswoman for J. Christopher Giancarlo, CFTC Chairman, explained that Giancarlo was among those asking for guidance from the commission’s ethics office. According to Richardson, the CFTC chairman doesn’t want employees investing in digital currencies who are dealing with regulations and investigations surrounding them, adding:

“The chairman has made it clear that staff members who own Bitcoin should not participate in matters related to Bitcoin, as it presents a conflict of interest.”

Last year, the CFTC took the step of permitting two U.S. exchanges to offer Bitcoin futures – Chicago exchanges CME and CBoE – helping to push the agency to the front of cryptocurrency oversight.

In his memo, Davies notes that employees shouldn’t invest if they have information that isn’t readily available to the public. This could include working on crypto regulation or an enforcement case.

“In this environment, the situation is ripe for the public to question the personal ethics of employees engaging in cryptocurrency transactions,” Davis wrote. “Please keep in mind that you must endeavor to avoid any actions creating the appearance that you are violating the law or government and commission ethical standards.”

The U.S. Securities and Exchange Commission (SEC) has also permitted its employees to invest in cryptocurrencies. According to Bloomberg, the SEC’s decision is largely limited to initial coin offerings (ICOs); however SEC employees can’t invest in them until seven days after the ICO has ended.

Regarding the CFTC’s decision to permit its employees to trade in digital currencies, Angela Walch, an associate professor who specializes in digital money and financial stability at St. Mary’s University School of Law, said:

“This is actually mind-boggling that they are allowing investing in this at all. It could absolutely skew their regulatory decisions.”

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CFTC Chief: US Should Tread Lightly on Crypto Exchanges

The head of the Commodity Futures Trading Commission said during a Senate hearing on Thursday that any federal-level approach to cryptocurrency regulation should be “carefully tailored” to the risks involved.

The comments by CFTC chairman J. Christopher Giancarlo, issued before the Senate Agriculture, Nutrition, and Forestry Committee, came days after he and Securities and Exchange Commission chief Jay Clayton testified before the Senate Banking, Housing and Urban Affairs Committee on the topic of cryptocurrency oversight.

The two notably spoke to what they said were gaps in the state-by-state system for licensing cryptocurrency businesses, with Clayton suggesting at the time that “we may be back with our friends from the U.S. Treasury and the Fed to ask for additional legislation.”

Giancarlo told lawmakers on Thursday that federal regulation around exchanges ought to be “carefully tailored, going on to say:

“Any proposed Federal regulation of virtual currency platforms should be carefully tailored to the risks posed by relevant trading activity and enhancing efforts to prosecute fraud and manipulation. Appropriate Federal oversight may include: data reporting, capital requirements, cyber security standards, measures to prevent fraud and price manipulation and anti-money laundering and ‘know your customer’ protections.”

“Overall, a rationalized federal framework may be more effective and efficient in ensuring the integrity of the underlying market,” he concluded.

The comments come after Giancarlo – who arguably won over segments of the cryptocurrency community by declaring that, without bitcoin, “there would be no distributed ledger technology” – urged for a balanced approach to regulation when speaking before the Senate committee last week.

“We owe it to this new generation to respect their enthusiasm for virtual currencies, with a thoughtful and balanced response, and not a dismissive one,” he remarked at the time.

According to the CFTC chair, the agency will continue to pursue enforcement actions where necessary and continue advising – and warning– would-be investors. This morning, the agency published an advisory on the risk of cryptocurrency pump-and-dump schemes.

Screenshot via U.S. Senate livestream

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A Positive Stance Should be Held On Cryptos – CFTC Chairman Giancarlo

Chairman of the Commodity Futures Trading Commission [CFTC] – J. Christopher Giancarlo, declared his bullish point of view on cryptocurrencies during one of the most important meetings when it comes to the digital currencies – SEC and CFTC declaring out important announcements related to crypto-regulation.

The community and enthusiasts that follow the coins were waiting for the meeting to take place for a long time – and did not let down. The event turned out better than just having typical politician discourse on how to keep the market under control, as the chairman added:

“We must crack down hard on those who abuse our young enthusiasm for bitcoin and blockchain technology,” he said to the congress. “We owe it to this new generation, to respect their interest in this new technology with a thoughtful regulatory approach,”

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The final part of the phrase did come as a conclusion to Mr Giancarlo after being inspired as he explained during a conversation with his own kids how they were very curios and interested in cryptocurrencies. That is more than understandable as we experienced coins like Bitcoin reaching all-time highs of $20.000 against the US Dollar per token and then in just a month dipping to $6,100.

Mr Giancarlo has also been saying that Bitcoin has intrinsic value. For him, the value is related to the cost of mining this cryptocurrency. He has also commented about possible regulations. As many other countries are doing, the cryptocurrency market should be allowed to grow while regulating illegal activities around it.

As explained in a previous EWN writing, the prices have been riding a recovery train very confident with the pair BTC/USD changing hands just below the major $8,000 level. That means that the market reacted instantly to comments that seem positive to the whole cryptocurrency community.

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There'd Be No DLT Without Bitcoin, Says CFTC Chief

“It’s important to remember that if there were no bitcoin, there would be no distributed ledger technology.”

That was the response from Commodity Futures Trading Commission chairman J. Christopher Giancarlo when asked by Arkansas Senator Tom Cotton about the value of the technology underlying cryptocurrencies like bitcoin.

In his remarks, Giancarlo described them as invariably linked, striking a bullish tone on the “enormous prospects” of the technology in a range of uses.

The comments came during a two-hour hearing of the U.S. Senate Banking Committee before a packed audience, touching on topics like potential new regulation, initial coin offerings and volatility in cryptocurrency markets.

To be sure, Giancarlo hedged his remarks somewhat by stating that he was “no pie-in-the-sky dreamer.” But nonetheless he pointed to applications in areas like financial markets infrastructure and charity funds management as promising ones.

Giancarlo’s written testimony also reinforced the point on the possible uses for blockchain – a topic that the CFTC chair has detailed at length in the past.

In his committee testimony, Giancarlo wrote that the tech has “the potential to enhance economic efficiency, mitigate centralized systemic risk, defend against fraudulent activity and improve data quality and governance.” He added:

“When tied to virtual currencies, this technology aims to serve as a new store of value, facilitate secure payments, enable asset transfers, and power new applications.”

SEC chairman Jay Clayton, in response to Cotton’s question, pointed to applications in the areas of data verification and record-keeping – i.e., using the technology to create distributed records of information – as particularly notable use cases.

“I hope people pursue it,” he said.

Image via Shutterstock

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