CFTC To Act Against Bitcoin Price Manipulation - Essay Example

Mark P. Wetjen, a Commodity Futures Trading Commission (CFTC) commissioner informed at a New York seminar that the agency was authorized to intervene against price manipulation in bitcoin markets.

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The mission of the CFTC is to protect market participants and the public from fraud, manipulation, abusive practices and systemic risk related to derivatives – both futures and swaps – and to foster transparent, open, competitive and financially sound markets.

He reasoned that any of the reasonable reading of their statute classifies digital currency bitcoin as a commodity. He thinks this is what gives CFTC the authority to act against any sort of manipulation.

Commissioner Mark P. Wetjen reminded that the definition of a commodity in CFTC statute is very broad.

This panel discussion was held at a seminar on the crypto currency organized by Bloomberg.

Jennifer Shasky Calvery, who is the director of the US Treasury Department’s Financial Crimes Enforcement Network, applauded New York’s Department of Financial Services for its effort to develop the BitLicense.

BitLicense is a proposed specific license for all bitcoin-related businesses that are conducted in the state.

The process has been very open and iterative to the people who have different rounds of comments.

An earlier version of the BitLicense provoked a backlash from Bitcoin community members. The proposal was criticized by many as it was a threat to innovation.

Although Benjamin M. Lawsky, the New York Superintendent of Financial Services, has signaled that the final version of BitLicense would perhaps be softer, it still is a controversial issue.

Ms. Calvery stated that over 100 bitcoin businesses registered with FinCEN.

When moderator Jerry Brito, who is the director of the Washington-based Coin Center, asked how Bitcoin companies can deal with the challenges of convincing banks to provide services, Ms. Calvery responded that the firms can win bankers’ trust by being committed to regulatory demands.

She often hears that banks are concerned about the Bitcoin industry and whether it is regulated enough. Another concern is how they control for their own risks.

Arthur Levitt, former Securities and Exchange Commissioner, was participating in the panel. He urged bitcoin companies to adopt a less opposing approach against regulations.

Mr. Levitt said that having a compliance officer is a mark of professionalism these days.

Mr. Levitt was hired as an adviser at bitcoin exchange Vaurum and prominent bitcoin payment processor BitPay recently.

From the points discussed by everyone at the panel discussion, it appears that the Bitcoin industry should support some regulation.