In response to concerns over bitcoin’s potential effect on the U.S. financial system, the nation's derivatives regulator will hold two meetings this month to discuss its procedures for listing and trading cryptocurrencies.
According to Reuters, the Commodity Futures Trading Commission’s technology and risk advisory committees will review its “self-certification” process for listing digital currency futures, as well as how those products' risks will be managed and regulated.
The meetings are in response from warnings by several institutions. The Securities and Exchange Commission (SEC) and the North American Securities Administrators Association (NASAA) have both cautioned about the risks of investing in bitcoin, stating that many in the virtual currency market were violating state and federal laws.
“The SEC and state securities regulators are pursuing violations, but we again caution you that, if you lose money, there is a substantial risk that our efforts will not result in a recovery of your investment,” said SEC Chairman Jay Clayton in a statement.
And in December, the Futures Industry Association wrote directly to the CFTC about the potential risks of allowing futures in volatile virtual currencies to be traded with traditional financial products.
Although the CFTC has tightened its jurisdiction over the cryptocurrency market, it has limited legal power to actively block exchanges from launching futures products. Currently, regulations allow designated exchanges to list products for trading without approval through a written self-certification with the regulator. The CFTC can block the contract only under exceptional circumstances.
“The responsible regulatory response to virtual currencies is consumer education, asserting CFTC authority, surveilling trading in derivative and spot markets, prosecuting fraud, abuse, manipulation and false solicitation and active coordination with fellow regulators,” CFTC Chair Christopher Giancarlo said in a statement.