Coindesk Logo

CFTC Chair: 'Explosion of Interest' in Crypto May Spawn New Clearinghouses

CFTC Chair: 'Explosion of Interest' in Crypto May Spawn New Clearinghouses

CFTC Chair: 'Explosion of Interest' in Crypto May Spawn New Clearinghouses

CFTC Chairman Giancarlo expects new firms to apply to become federally-regulated clearinghouses so they can offer crypto futures.

CFTC Chairman Giancarlo expects new firms to apply to become federally-regulated clearinghouses so they can offer crypto futures.

CFTC Chairman Giancarlo expects new firms to apply to become federally-regulated clearinghouses so they can offer crypto futures.

AccessTimeIconMay 1, 2019, 7:30 PM
Updated Aug 18, 2021, 11:17 PM

Presented By Icon

Election 2024 coverage presented by

Stand with crypto

The U.S. Commodity Futures Trading Commission (CFTC) expects to see more companies apply to become federally-regulated clearinghouses as a result of growing interest in cryptocurrencies.

Chairman J. Christopher Giancarlo, testifying on "the state of the CFTC" before the U.S. House Agriculture Committee on Wednesday, said in his opening remarks that the clearinghouses his agency regulates are "critical single points of risk in the global financial system" which continue to grow and become more complex.

Clearinghouses are financial institutions that facilitate transactions between two parties, acting as intermediaries to ensure trust on all ends. The CFTC routinely examines these entities to identify any possible issues that may affect their ability to monitor or control their risks, Giancarlo told lawmakers. "The importance of these examinations to overall financial stability are all increasing."

The agency regulates a number of registered clearinghouses within the U.S., as well as six located overseas and has exempted four foreign clearinghouses. This number will grow, Giancarlo said – especially with the introduction of crypto futures.

He added:

"The Commission anticipates new applications for clearinghouse registration resulting from the explosion of interest in cryptocurrencies; an area in which protection of the cryptocurrencies will be one of the highest risks."

Crypto derivatives provider LedgerX operates as a clearinghouse already, while platforms like ErisX are still waiting for the CFTC to approve their applications to become derivatives clearing organizations (DCOs), which is a necessary designtation to operate as a clearinghouse.

Market intel

Giancarlo also addressed LabCFTC, the regulator's fintech research group created to keep up with changing technology.

During his remarks, the Chairman highlighted blockchain and cryptocurrencies as two aspects of "rapidly changing markets and technological developments."

LabCFTC was able to help the regulator anticipate some of this development and what an appropriate regulatory response might be, he said.

In particular, the CFTC has been able to independently analyze market data "without being reliant on self-regulatory organizations and market intermediaries," he said.

Moreover, the CFTC was able "to determine the value of technological innovations," he said, citing "crypto-asset-based futures products" as an example.

CME and Cboe both announced they were launching cash-settled bitcoin futures products at the end of 2017, and ErisX, LedgerX, Seed CX and Intercontinental Exchange's Bakkt all plan to offer physically-settled bitcoin futures and forwards once they've achieved the necessary regulatory approvals.

Giancarlo image via YouTube

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information have been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. CoinDesk has adopted a set of principles aimed at ensuring the integrity, editorial independence and freedom from bias of its publications. CoinDesk is part of the Bullish group, which owns and invests in digital asset businesses and digital assets. CoinDesk employees, including journalists, may receive Bullish group equity-based compensation. Bullish was incubated by technology investor Block.one.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.