U.S Regulator CFTC Allows Its Employees To Trade in Digital Currencies
The U.S regulator for the derivatives and the commodities marketplace, the Commodities Futures Trading Commission (CFTC) has given a green signal to its employees to trade in cryptocurrencies, reports Bloomberg.
Although the CFTC has given the approval for direct trading of digital currencies, trading in the other Bitcoin investment products like the Bitcoin Futures Contracts is still prohibited. Last year in 2017, the CFTC granted permission to CBOE and CME Group to launch their own Bitcoin Future Contracts in the market.
According to a memo on Feb. 5 by agency general counsel, Daniel Davis, the decision was taken after multiple queries from the staff members asking the morality and legality of the involvement in cryptocurrency trading. The CFTC granted the permission because it only regulates the futures contracts derive from the digital currency commodity marketplace, and not the market itself.
As a result, CFTC looks at Bitcoins and other cryptocurrencies just like commodities, and thus investing in them is considered legal. However, the CFTC has made it clear that all those employees who want to get involved in buying/selling of cryptocurrencies will be barred from any decision making process in order to avoid conflict of interest.
Erica Richardson, a spokeswoman for CFTC Chairman J. Christopher Giancarlo said: “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.”
Davis' memo also emphasizes the need for employees to act ethically, stating:
"In this environment, the situation is ripe for the public to question the personal ethics of employees engaging in cryptocurrency transactions. 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.”
However, Bloomberg notes that some legal experts are not happy with this decision of CFTC. Angela Walch, an associate law professor with a specialization in digital money and financial stability at St. Mary's University, called the decision "mind-boggling," saying the decision "could absolutely skew their regulatory decisions.”
Richard Painter, a securities lawyer and former White House ethics lawyer believes that cryptocurrencies are quite similar to trading in futures and has said that this decision by the CFTC “just looks terrible”.
Although the agency has received some criticism from the industry experts, Chairman Giancarlo is said to have won the hearts of crypto enthusiasts recently by his comments he made during a recent Senate hearing.
Mr. Giancarlo said that had Bitcoin not existed, the world would have never known about the revolutionary Distributed Ledger Technology (DLT) and so cryptos should be given its due credit. He further added that “It strikes me that we owe it to this new generation to respect their enthusiasm to respect their enthusiasm about virtual currencies with a thoughtful and balanced response, not a dismissive one.”