CFTC Moves to Address Industry Concerns Over Virtual Currencies -- Update

By Gabriel T. RubinFeaturesDow Jones Newswires

The top U.S. derivatives regulator is moving to address financial-industry concerns over its oversight responsibilities for virtual currencies and related futures products.

Two Commodity Futures Trading Commission advisory committees, which include both regulators and industry participants, will meet in late January to address issues related to policing activity on virtual-currency exchanges, the clearing of bitcoin futures and the unique risk of fraud and manipulation related to virtual currencies.

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"Ignoring virtual-currency trading will not make it go away. Nor is it a responsible regulatory strategy," said Chairman J. Christopher Giancarlo in a statement announcing the meetings.

In addition to the announcement, the CFTC also released a fact sheet further elaborating on its approach to regulating virtual currencies. It also pushed back on criticism leveled by powerful institutional investors, including billionaire Thomas Peterffy and the Futures Industry Association, who have opposed to the CFTC's approach to bitcoin futures. They have raised concerns in recent weeks about whether clearing bitcoin futures alongside other, more traditional derivatives products might introduce unwanted risks into the clearing process.

The FIA, in a letter to Mr. Giancarlo, questioned whether the CFTC could have done more to solicit public input or delay the launch of bitcoin futures by exchanges run by CME Group Inc. and Cboe Global Markets Inc.

"Neither statute nor rule would have prevented CME and [Cboe Futures Exchange] from launching their new products before public hearings could have been called," according to the CFTC. "Even if the CFTC could have held public hearings or requested public input, it is unlikely that the outcome would have changed," the commission added, saying its staff has determined the bitcoin futures applications comply with commodities laws and regulations.

Write to Gabriel T. Rubin at gabriel.rubin@wsj.com

(END) Dow Jones Newswires

January 04, 2018 13:11 ET (18:11 GMT)