Heath Tarbert, the Chairman of the Commodity Futures Trading Commission (CFTC), has come out to support the creation of regulated derivatives and financial products in the cryptocurrency market.
Speaking in an interview with Cheddar Monday earlier this week, the agency boss explained that he will be involved in creating a regulated market for futures in the crypto space, adding that these will go a long way in helping to instill confidence in cryptocurrencies and present them as even more of a stable investment vehicle for institutional and high-net-worth investors.
— Heath Tarbert (@ChairmanHeath) January 13, 2020
The Need to Build Investor Confidence
As he explained, some of the most significant problems that a lot of investors have with cryptocurrencies include risk management, hedging, and price discovery. However, by allowing crypto assets to become more regulated by the CFTC, he believes that investors will have easier access to regulated, trusted financial products, thus boosting their level of confidence in the asset class.
“It’s helping to legitimize [digital assets], in my view, and add liquidity to these markets,” he added.
The comments are coming at a time when Bitcoin is particularly looking attractive to investors looking to divest their wealth. The asset was recognized as the best-performing investment product of the 2010s, and has coasted off that momentum to start the new decade on a high note.
Several companies that have provided investment opportunities in Bitcoin over the past few years are currently reporting massive market activity. Last week, the Chicago Mercantile Exchange posted on Twitter that open interest (a metric that shows the level of market activity for an asset) in its Bitcoin futures was at an all-time high. Bakkt, a subsidiary of the Intercontinental Exchange that launched physically-delivered Bitcoin futures last September, also saw an all-time high in daily contract sold last month, with 6,601 BTC sold.
Loeffler Gets a Step Closer to the CFTC
Sadly, the growth in desire for crypto-related financial tools hasn’t quite been met by regulators’ ability to provide effective and enabling oversight. The Securities and Exchange Commission (SEC) and the CFTC have so far been slow to adapt to the crypto space, and this, as SEC boss Hester Pierce has chided regulators over, has only led to a stifling of innovation in the space.
U.S. Sen. Kelly Loeffler (R-Georgia), sworn in 9 days ago and seeking election this November, now has a leadership PAC: Growing Georgia https://t.co/FODFxJPK6p
— Greg Giroux (@greggiroux) January 15, 2020
Thankfully, however, some progress could be made on that matter. Kelly Loeffler, the chief executive of Bakkt, who was appointed to the U.S. Senate earlier this month, has been added to the Senate Agriculture Committee, which directly oversees the CFTC.
Although her inclusion has caused some uproar over conflict of interest (since her spouse, Jeffrey Sprecher, heads the Intercontinental Exchange and is to be overseen by the CFTC as well), it is possible that her influence could be lent in helping steer the agency in the right direction as far as the crypto space is concerned.
Loeffler has already made a commitment to recuse herself if need be, adding that she’ll comply with the Senate ethics rules.