CFTC Tells Employees It’s Fine to Trade and Own Cryptocurrency
The Commodity Futures Trading Commission (CFTC) — America’s top futures and options markets regulator — just gave the greenlight for its employees to invest in cryptocurrency. The decision came after the CFTC received “numerous inquiries” from its employees to know if they are legally allowed to invest in cryptocurrencies while working for the commodities regulator.
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The watchdog agency updated its ethics guideline after CFTC’s general counsel, Daniel Davis, gave the all-clear signal in a February memo, clarifying that employees can trade virtual currencies as commodities like oils and metals.
Yes to Crypto, No to Bitcoin Futures
However, CFTC employees aren’t allowed a free rein for investing in cryptocurrencies. As per the CFTC’s ethics guidance, members of the staff are permitted to trade digital assets but are not allowed to margin trade on cryptocurrencies.
Also, workers are prohibited to trade cryptocurrencies if the trade is a result of “inside information” garnered from their profession. Additionally, employees are also not allowed to invest in the bitcoin futures that the futures regulator CFTC supervises.
Davis noted in the memo:
“In this environment, the situation is ripe for the public to question the personal ethics of employees engaging in cryptocurrency transactions. Please keep in mind that you must endeavor to avoid any actions creating the appearance that you are violating the law or government and commission ethical standards.”
In 2014, the futures regulator CFTC deduced that digital currencies are commodities. Although the CFTC has no authority to regulate cryptocurrency exchanges, it does have direct control over the crypto futures market.
A Controversial Decision
Many have questioned CFTC’s relaxed approach towards regulating cryptocurrencies. Angela Walch, an associate law professor with a specialization in digital money and financial stability at St. Mary’s University, argues that it’s “actually mind-boggling that they are allowing investing in this at all. It could absolutely skew their regulatory decisions.”
Sharing similar sentiments, Richard Painter — a securities lawyer and former White House ethics lawyer under President George W. Bush — thinks that virtual currencies are more akin to futures than commodities and the CFTC should regulate them instead of allowing workers to invest in them. “This just looks terrible,” Painter said.
Meanwhile, CFTC chairman Christopher Giancarlo has earned a lot of respect in the cryptoverse. Crypto enthusiasts have labeled Giancarlo as “Bitcoin Jesus” for the warm comments he made toward digital assets at a recent U.S. Senate hearing.
At the time, the chairman stated it’s “important to remember that if there was no bitcoin, there would be no blockchain.” Some crypto proponents expressing their joy have even requested Giancarlo to run for U.S. President in 2020.
Did CFTC make the right decision to allow its employees to trade cryptocurrencies? Let us know your thoughts in the comments section below.
Images via Varchev, Reuters