- CFTC permits employees to investments in digital tokens after ‘numerous’ employee inquiries
- Critics say this move by CFTC could lead to lax oversight.
United States: Weeks after the US’s main commodities regulator, Commodity Futures Trading Commission (CFTC) began overseeing Bitcoin futures, and after several inquiries from employees, the CFTC declares it now allows its employees to invest in digital tokens.
The agency states that under the CFTC’s ethics guidance, employees can trade digital tokens as long as they don’t buy these tokens on margin or have inside information gathered from their jobs. However, investing in the Bitcoin futures that the CFTC polices is prohibited.
Though the actual number of people at the CFTC who are actively trading the digital tokens is unknown, Daniel Davis, the agency’s general counsel, told workers in a February 5 memo that the guidelines were being issued after the commission’s ethics office had received “numerous inquiries” about whether trading in cryptocurrencies were permissible.
This decision from the CFTC comes at a time when federal agencies are debating on how to impose rules on cryptocurrencies that have swiftly become a global investment fad. A number of officials have been cautious of putting a government approval on cryptocurrencies, with increasing concerns about their wild price swings, wide use in illicit transactions and the frequency with which they’ve been stolen and hacked.
Angela Walch, an associate professor who specializes in digital money and financial stability at St. Mary’s University School of Law says:
“This is actually mind-boggling that they are allowing investing in this at all. It could absolutely skew their regulatory decisions.”
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.”
The Securities and Exchange Commission (SEC) also allows its employees to invest in cryptocurrencies, with some exceptions similar to the CFTC. However, the SEC, whose jurisdiction presently is largely limited to initial coin offerings (ICOs), has less responsibility for overseeing the crypto markets.
While most employees of CFTC are not likely to trade barrels of oil or bushels of wheat, partly because they could need a warehouse to store them, digital coins don’t present that problem.
The regulatory decisions by the CFTC can have an impact on the crypto markets. A major example is what happened on December 1, where the price of Bitcoin jumped almost 13% at the CFTC’s announcement that it was allowing Bitcoin futures.
However, Painter, a professor at University of Minnesota Law School warns that the CFTC should be trying to regulate digital tokens, and not allowing its employees to speculate on them.
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