Bitcoin Futures Trading Commences; Implications for Funds and Registered CPOs and CTAs
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Only a few weeks ago, SEC Chair Jay Clayton made clear that trading in virtual currencies can present a significant risk to investors and poses unique regulatory challenges.
He pledged to provide more clarity and transparency about the risks, and he promised the SEC would publish guidance for investors on standards, process, value and existing cboe and cme self-certify bitcoin futures cantor self-certifies bitcoin binary options and nfa issue. In the weeks since Mr.
This startling volatility presents both an allure and a danger for uninformed investors. Such enthusiasm could mask the significant differences between bitcoin and other traditional commodities. The bitcoin worldwide network is not managed cboe and cme self-certify bitcoin futures cantor self-certifies bitcoin binary options and nfa issue a central repository or administration.
Transactions are intermediary-free cboe and cme self-certify bitcoin futures cantor self-certifies bitcoin binary options and nfa issue take place between users directly. Such reliance carries substantial and unique cyber risk. For investors, the run-up in price belies the uncertainty of the legal and regulatory treatment associated with crypto-currencies. This week, some of that uncertainty may have abated as the Chicago Mercantile Exchange Inc.
Self-certification is the first step in the process toward offering such products on the exchanges. CBOE will offer contracts referencing the auction price of bitcoin on a single exchange, CME will offer contracts referencing the weighted auction price across four exchanges, and the Cantor Exchange Cantor self-certified a new contract for bitcoin binary options.
That said, the CFTC emphasized that the exchanges had committed to coordinating and sharing surveillance activities with the Commission. The CFTC also committed to working with the National Futures Association NFA member firms, merchants and introducing brokers who are involved in the trading of any virtual currency futures product. It is noteworthy that the CFTC offered an important disclaimer:. It does not constitute a Commission endorsement of the use or value of virtual currency products or derivatives.
It is incumbent on market participants to conduct appropriate due diligence to determine the particular appropriateness of these products, which at times have exhibited extreme volatility and unique risks. As if to underscore the point, the NFA issued a contemporaneous Investor Advisory on crypto-currencies. The timing may be coincidental, but an emergency injunction issued by the U. District Court for the Eastern District of New York shows that the regulators are serious about prosecuting investor fraud in crypto-currency.
The new SEC Cyber Unit see Bates report here succeeded in securing an Order that prevents a "recidivist securities law violator" and his business partner from continuing to raise funds through an ICO.
The Complaint charges the defendants with violating SEC anti-fraud provisions, registration provisions, and other federal securities laws. The Cyber unit seeks permanent injunctions, disgorgement plus interest and penalties, and an officer-and-director bar from offering digital securities.
The development of the cyber currency marketplace is proceeding rapidly. They will, no doubt, test their authority with aggressive enforcement as the market continues to develop. Bates will keep you apprised. What do you think? Bates Group is with you every step of the way. The Challenge for U.
Regulators is Getting Real. Contact Bates Group Bates Group is with you every step of the way.