By
Bhushan Akolkar
April 23rd, 2024
CFTC though has mentioned that staff members won’t be allowed in any decision-making process involving cryptocurrencies to avoid conflict of interest.
The U.S. Commodity Futures Trading Commission (CFTC) – the commodities and derivatives watchdog, has recently announced a milestone decision allowing its employees to invest in cryptocurrencies. However, according to Bloomberg, CFTC still maintains a ban on trading in Bitcoin Futures or any sort of participation in that regard.
As per the report, CFTC’s general counsel – Daniel Davis – has given a go ahead in a memo written on Feb 5, earlier this month. The report mentions that the reason behind giving a green signal to cryptocurrency trading is that the agency identifies digital currencies as commodities, and so employees can just trade them like any other commodities like precious metals, barrels of oil, etc.
However, the policy also has some caveats. It mentions that the employees won’t be able to take to take the advantage of any insider information which they need during the course of their job at the regulatory agency. Erica Richardson, a spokeswoman for CFTC Chairman J. Christopher Giancarlo, said that “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.”
In the memo, Daniel Davis has emphasized on the need for his 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.”
Back in 2014 itself, CFTC granted cryptocurrencies a commodity status. Needless to say that CFTC’s this decision has surprised many experts from the digital currency community. 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.”
Over the last six months, CFTC has been seen quite actively involved over the matter relating to cryptocurrencies. Its first milestone decision was granting CBOE and CME the license to carry out Bitcoin Futures contracts, back in December 2017. Moreover, the agency has also shown willingness to work in coordination with the government bodies and form a regulatory framework for cryptos, thereby protecting investor’s interests. A few days back, the agency also emphasized the need to create Crypto and DLT Committees.
In the past, the agency has also been criticized a lot for its “relaxed” approach to digital currencies. However, chairman Christopher Giancarlo has earned a lot of respect in the cryptocurrency investor community, especially after his positive comments during a recent Senate hearing, last month.
Giancarlo in address had said that the much appreciated Distributed Ledger Technology (DLT) would not have existed if Bitcoin was not invented. He further said 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.”