Regulated Derivatives Will Legitimize Crypto, Says CFTC Chair

Tuesday 10 January 2020, 10:45 PM AEST - 5 months ago

CFTC Chairman Heath Tarbert speaks at Invest: NYC 2019; Image by Joe Jenkins for CoinDesk

The chairman of the Commodities and Futures Exchange Commission (CFTC) believes regulated derivatives will instill market confidence in cryptocurrencies.

Chair Heath Tarbert told Cheddar Monday that his agency is helping create a regulated futures market that investors would be able to "rely on" for better "price discovery, hedging and risk management."

"By allowing [cryptocurrencies] to come into the world of the CFTC," investors can better access trusted and regulated financial products, improving overall confidence in the asset class, according to Tarbert. "It's helping to legitimize [digital assets], in my view, and add liquidity to these markets," he said.

The marketplace for cryptocurrencies derivatives is expanding. Although still dominated by unregulated exchanges, it is gradually facing greater competition from regulated alternatives. Bakkt launched physically-delivered bitcoin futures last September and CME, which first launched bitcoin futures in December 2017, opened trading for options contracts Monday.

In the interview, Tarbert reiterated that his perspective will only extend to cryptocurrencies the CFTC currently classifies as commodities. Appointed chairman last April, he has advocated for an open regulatory regime when it comes to cryptocurrencies.

In an op-ed published on the CFTC website November, Tarbert argued that regulators should adopt a greater "principles-based approach" to the asset class."The trick with digital assets is to foster the development of exciting new products while mitigating potential risks," he wrote.

Rather than the regulator issuing prescriptive rules that companies need t ...

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