The struggle between US regulatory agencies about who can act in cases involving Bitcoin continues as the Commodity Futures Trading Commission, an independent United States Federal agency determined that it has enforcement powers against price manipulation in Bitcoin markets.
This agency was established in 1974 by the Commodity Futures Trading Act to promote “competitive and efficient futures markets and protect investors against manipulation, abusive trade practices and fraud.”
In remarks at the Bitcoin conference held at Bloomberg, CFTC Commissioner Mark Wetjen stated when asked if his agency had authority:
“It has not been tested, but I do believe we have the authority because Bitcoin, by I think a very rational reading of our statute, classifies as a commodity and the definition of a commodity under the Commodity Exchange Act."
Essentially Wetjen was saying that if Bitcoin is a commodity and there is manipulative activity, his agency has enforcement powers. Wetjen does favor regulation but also suggests that such regulation should be “flexible.” He said that regulation concerning Bitcoin is important because Bitcoin accepting merchants have told him that they need to be protected against price volatility.
If the CFTC does engage in regulation there will certainly be challenges. Monitoring exchanges will certainly be one. But they currently do not seem to have Bitcoin as a particular target. The agency simply seems to consider Bitcoin as it considers any other commodity and plan to treat it as any other asset class.
In relation to exchanges, Wetjen said that they would have to rethink current policies with an eye toward interpretation and understanding. Wetjen’s attitude really should not come as a surprise however, as they have already given approval to the swap execution facility TeraExchange for USD/BTC swaps in September of 2014.
The New York Bitlicense proposal was also discussed at the Bloomberg panel and Jennifer Shasky Calvery, a director of the US Treasury Department’s Financial Crimes Enforcement Network, said that the Treasury welcomed such attempts to get a grip on this new technology:
“I am heartened by the fact that we have a state like New York, and other states, that are issuing licenses and trying to think through some of the issues.”
But not everyone is happy with the proposal, which Shasky Calvery called “open and honest.” The general consensus is that since the blockchain technology is open-source and no one actually owns it, any attempt at regulation will reverse this and, in effect, turn it into a centralized nightmare controlled by the same entities that have created such havoc in our current economic system.
The CFTC felt that it had an obligation to protect consumers but Dogecoin founder Jackson Palmer felt that while scams like pump and dump could be addressed by regulation, anyone involved in finance had an obligation to do their own investigations:
“It’s the Wild West and I think it’s important that consumers educate themselves before throwing their life savings into crypto vaporware, which is what a lot of people are doing right now. Educate yourself; you can’t expect the government to protect you from every scam artist out there.”
Self-regulation seems to be the most popular sentiment in the community but while that may work in an ideal world, the reality is that the world is full of people who do not necessarily have the best of motives and, because of this, a future with non-regulated virtual currencies seems unlikely.
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