SEC & CFTC Commissioners Explain Bitcoin ETF Processes

Recently, the lead figures from the Commodity Futures Trading Commission and the United States Securities and Exchange Commission have come together to discuss their regulatory approaches to Bitcoin futures contracts and Bitcoin exchange-traded funds, also known as ETFs. The two regulators are also open to collaborating on their oversight of crypto investment products.

At a Bipartisan Policy Centre event last week called “The Year Ahead for Capital Markets” the SEC Commissioner Hester Peirce and CFTC Commissioner Brian Quintenz discussed their organisations approach the regulation of crypto investment products.

Quintenz spoke on the oversight of his agency and Bitcoin futures contracts listed by Cboe futures exchange and CME Group, saying, “we have a process in the Commodity Exchange Act that allows the exchanges to self-certify a contract if they believe it meets the requirements of the Act.”

In addition to this, he continued to say that the CFTC has got a “review period in which we can say no we disagree with you and here’s why, but if we don’t disagree, [then] they have the opportunity to go ahead and self-certify that contract.” Following on from this, Quintenz noted that both of the aforementioned exchanges continue on the route of self-certification “so these contracts get listed without our approval but also without our disapproval.”

The commissioner went on to state that “our jurisdiction over those contracts requires that they not be readily susceptible to manipulation … in any capacity,” saying that there is also the “question of how easily can we discover it and usually it’s very easily.”

Commissioner Peirce from the SEC, occasionally known as “crypto mom” amongst members of the Bitcoin community, said that “at the SEC we’ve been unwilling to … sign off on a bitcoin ETF, an exchange-traded product based on bitcoin,” and going on to say that “my concern about our approach in that area is it looks a little bit like a merit-based approach judging the underlying bitcoin markets.”

Although she later contradicted her agencies view saying that Bitcoin markets aren’t regulated enough. Peirce argued, “there are lots of markets that aren’t regulated but we nevertheless build products on top of them.” Finishing off, she said, “I think we have to be very careful with that kind of reasoning.”