CFTC Chair Raises Considerations Over Bitcoin ETFs ‘Skinny Regulation’, Warns Of Market Integrity Dangers

In a long-awaited transfer, Bitcoin ETFs have lastly entered the market after receiving approval from the US Securities and Trade Fee (SEC) on January 11. Nevertheless, the Commodity Futures Buying and selling Fee (CFTC) chair, Rostin Behnam, has expressed issues in regards to the regulatory panorama surrounding these new index funds.

CFTC Chair Questions Suitability Of Bitcoin ETFs

In a keynote issued on Friday, Behnam emphasised that whereas the SEC’s approval was seen as a big step in creating digital asset markets, there are nonetheless a number of “unresolved points” throughout the money markets for digital belongings. 

These issues embody “opaque and inconsistent” practices associated to commerce settlement, conflicts of curiosity, information reporting, cybersecurity, buyer protections, transparency, and normal market integrity.

Though the Bitcoin ETFs have achieved authorized certainty, permitting them to focus on a broader viewers, Behnam underlines the shortage of “concrete measures” to handle these market challenges. 

The CFTC chair factors out that Bitcoin’s speculative and risky nature has been wrapped in a “skinny layer of oblique regulation, ” presenting the product as a “shiny” new providing. This, in flip, raises questions on its suitability for mass market participation and potential dangers to market stability, based on Behnam. 

Regulatory Clampdown Imminent? 

Behnam explains that the limitations to successfully regulating this rising Bitcoin ETFs market have typically been rooted in fears of legitimization. He argues that laws alone doesn’t assure legitimacy, because the SEC’s choice proved. 

Drawing an analogy to racing, the CFTC chair emphasizes {that a} license doesn’t robotically make somebody a legit driver; “they need to reveal their expertise and show their value inside established parameters.”

Behnam highlights that Congress has granted no federal regulator authority over the money markets for digital belongings. Even regulated merchandise like Bitcoin futures decide their legitimacy by market members’ demand for the product fairly than a self-certification course of. 

Behnam emphasizes the position of exchanges in creating and implementing requirements for derivatives merchandise, based mostly on their distinctive information of the underlying market and shut relationships with market members.

Behnam additional said that the absence of laws has not impeded the keenness for digital belongings. Nevertheless, he expresses issues that the regulatory approval of Bitcoin ETFs could lead market members, each retail and institutional, to mistakenly assume that these merchandise include complete regulatory oversight within the money commodity digital asset area. 

To deal with these issues and make sure the integrity of the Bitcoin ETFs market, Behnam requires federal laws governing money market digital belongings, emphasizing the important want for motion. Behnam concluded:

The issues I’ve publicly voiced for the higher a part of six years relating to the digital asset commodity spot market have solely grow to be magnified.  The necessity for federal laws over money market digital belongings has by no means been extra important, and I’ll proceed my name for motion.

Following a big interval of heightened promoting stress, the biggest cryptocurrency available in the market skilled a pointy value correction. Nevertheless, BTC has rebounded to the $41,700 stage after reaching a low level of $38,500 on Tuesday.

It stays unsure what extra measures regulators could take relating to the nascent crypto market, significantly relating to the SEC’s approval of Bitcoin ETFs. 

The affect of those measures on buying and selling and the involvement of latest traders is but to be decided, and it might have each optimistic and destructive implications.

Featured picture from Shutterstock, chart from TradingView.com