CFTC Commissioner Brian Quintenz discussed the implications of listing bitcoin futures products, keeping pace with technological developments, and the importance of international regulatory cooperation. In remarks at the Technology and Standards – Unlocking Value in Derivatives Markets Conference in London, Commissioner Quintenz reiterated earlier statements that the CFTC must position itself as a "21st Century regulator" in order to foster an effective and efficient regulatory environment.
Commissioner Quintenz said that the listing of bitcoin futures products is currently being debated by the CFTC and certain major exchanges. He reported that, while the exchanges plan to list the bitcoin futures through the self-certification process, they have provided information to the CFTC that allows it to analyze and identify any potential compliance issues. Commissioner Quintenz noted that exchanges are obligated to only list products that are not readily susceptible to manipulation, and that they have a responsibility to prevent manipulative practices. Despite the risks, Commissioner Quintenz said, the listing of bitcoin futures products will allow investors to trade bitcoin exposures on a regulated market, subject to CFTC oversight.
Commissioner Quintenz explained that distributed ledger technology ("DLT") has potential implications for trade execution, processing, and the reporting and recordkeeping of derivatives. He pointed to the LabCFTC initiative as the driving force behind CFTC efforts to modernize and keep pace with FinTech developments. Commissioner Quintenz explained the various components of LabCFTC: (i) GuidePoint, which will serve as a point of contact to make the CFTC more effective for innovators, (ii) CFTC 2.0, which will drive CFTC understanding and adoption of new technologies, and (iii) domestic and international regulatory cooperation to exchange ideas and develop best regulatory practices.
Commissioner Quintenz also underscored the importance of recent coordination with international regulators, including the comparability determinations and equivalency agreement reached between the CFTC and the European Commission. He also identified central counterparty supervision as an area that will require coordination to ensure effective supervision.
Commentary / Bob Zwirb
Along with his remarks relating to the need for greater international cooperation, Commissioner Quintenz also observed that "we should all remember that market participants will always look to engage in the most well-designed regulatory frameworks. Trading counterparties seek neither the least nor the most regulated marketplaces, but rather marketplaces that have the best balance of sensible, objective, and reliable regulation." This sentiment reflects an important economic insight that cuts against conventional wisdom; i.e., that competition among regulators invariably leads to a "race to the bottom." Instead, as Mr. Quintenz points out, it can lead to a competitive regulatory equilibrium that places a value on an array of factors important to market participants.
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