CFTC Gives Green Light to Trade Cryptocurrencies to Employees

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The US Commodity Futures Trading Commission (CFTC) has given its employees the green light to exchange cryptocurrencies, a decision that came in response to «numerous» inquiries from agency staff.

The coverage, which Bloomberg reports was declared in a Feb. 5 memo written by CFTC general counsel Daniel Davis, stated that because the agency has determined that cryptocurrencies are commodities, workers can trade them like they would precious metals, barrels of oil, and other commodities.

However, this policy has caveats. Cryptocurrencies may not be traded by CFTC employees nor may they take advantage of any insider information they acquire in the course of their work in the agency.

«In this environment, the situation is ripe for the public to question the personal ethics of workers participating in cryptocurrency trades,» Davis wrote. «Please bear in mind that you must endeavor to avoid any actions creating the appearance that you are violating the law or government and commission ethical standards.»

Furthermore, CFTC employees are prohibited from investing in futures contracts because they fall under the regulatory agency's purview.

«The chairman has made it clear that staff members who own Bitcoin shouldn't participate in matters related to Bitcoin, as it poses a conflict of interest,» said Erica Richardson, a spokeswoman for CFTC Chairman J. Christopher Giancarlo.

The CFTC first determined that cryptocurrencies are commodities in 2014, giving the agency a modicum of oversight on cryptocurrency trading. While the agency does not have the authority to supervise cryptocurrency exchanges — which are now regulated at the state level under money transmitter laws — it has direct oversight of US cryptocurrency futures markets, the first of which launched in December on Chicago-based exchanges CBOE and CME. CFTC regulators may investigate manipulation and fraud in the spot markets, and the agency has brought suits against investment scams that are cryptocurrency that are alleged.

While the agency was criticized for its «relaxed» approach to cryptocurrency regulation, Chairman Giancarlo has earned the respect of many cryptocurrency investors, largely because of comments he made in a recent US Senate committee hearing.

«It strikes me that we owe it to this new generation to respect their excitement to respect their enthusiasm about virtual currencies with a thoughtful and balanced answer, not a dismissive one,» he said, adding that distributed ledger technology (DLT) would not exist if Bitcoin had not been invented.