At a meeting of the CFTC Technology Advisory Committee ("TAC"), members heard presentations from subcommittees on crypto regulation, virtual currencies and distributed ledger technology ("DLT") adoption.
The TAC was established to "advise the Commission on the impact and implications of technological innovations on financial services and the futures markets, and the appropriate legislative and regulatory response to increasing use of technology in the markets." Commissioner Brian Quintenz sponsors the TAC on a rotating basis. Members include representatives of futures exchanges, self-regulatory organizations, financial intermediaries, market participants and traders.
In his opening statement, CFTC Commissioner Brian Quintenz provided highlights of the subcommittees' work.
- The Automated and Modern Trading Markets Subcommittee examined the impact that manual versus automated trading has had on the commodity futures market, finding no correlation between the rise in automated trading and price volatility;
- the Virtual Currency Subcommittee gave a presentation on "consensus mechanisms used for virtual currencies," and explained how the use of such mechanisms affects the likelihood of manipulation or falsification of the ledger;
- the American Bar Association Working Group Subcommittee on the Innovative and on Digital Products and Processes gave an overview of current federal and state regulation of virtual currencies and digital assets;
- the Cybersecurity Subcommittee provided an overview of the Financial Services Sector Coordinating Council Cybersecurity Profile, which presents a "common, standardized approach regulators could use" when looking at cybersecurity at firms; and
- the Distributed Ledger Technology and Market Infrastructure Subcommittee described the current state of DLT, including challenges to more widespread adoption of DLT, and whether CFTC regulations may be impeding the adoption of DLT.
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