How to Launch Cryptocurrency Derivatives: CFTC Issues New Guidance
May 21 2018 - 8:45PM
Dow Jones News
By Gabriel T. Rubin
WASHINGTON -- The top U.S. derivatives regulator on Monday
provided guidance to exchanges and clearinghouses that want to list
cryptocurrency products, responding to industry concerns about the
vetting process for new derivatives contracts like bitcoin
futures.
The advisory from the Commodity Futures Trading Commission
focuses on a set of best practices for launching cryptocurrency
derivative contracts. It says exchanges should have the ability to
monitor underlying cryptocurrency spot markets, have a plan for
coordinating with federal regulators, and reach out to market
participants to solicit comments on a pending contract launch.
"As the virtual currency market continues to evolve, CFTC staff
will seek to provide additional guidance to help market
participants keep pace with innovation while complying with CFTC
regulations," the agency's division of market oversight director,
Amir Zaidi, said in a statement.
CME Group Inc. and Cboe Global Markets Inc. launched separate
bitcoin futures contracts in December, after limited consultations
with the CFTC. Bitcoin's volatility and worries about bitcoin
exchanges' lack of transparency and cyber vulnerability have caused
some on Wall Street, including the Futures Industry Association, to
call on the CFTC to take a harder look at virtual currency
derivatives before allowing them to come to market.
Bitcoin futures have so far behaved like many other new
contracts, without pronounced price volatility and limited but
growing liquidity. A Federal Reserve Bank of San Francisco study
found that the launch of bitcoin futures in December led to a steep
drop in the price of bitcoin, since it allowed "pessimists" to have
a say in the market as opposed to just investors who were bullish
on bitcoin.
Write to Gabriel T. Rubin at gabriel.rubin@wsj.com
(END) Dow Jones Newswires
May 21, 2018 20:30 ET (00:30 GMT)
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