Bitcoin [BTC] is a commodity but we don’t have oversight of the underlying spot markets, says Former CFTC Commissioner

Recently, former CFTC Commissioner, Sharon Bowen spoke about how concerned the regulatory community is about cryptocurrencies, LabCFTC’s approach and her opinion about the current administration’s acceptance of new class assets, at the Bloomberg conference.

Bowen went on to speak about the regulators’ concern towards cryptocurrencies, whether they are from the EU, Africa or Hong Kong. One of the main things that regulators look for is that their currencies and monetary supply are not harmed by the virtual currencies, Bowen stated. Furthermore, she said that they are not only working towards protecting investors from manipulation but also wish to “embrace the innovation and technology”.

According to her, the whole process of regulation is all about finding the right balance between the “racing innovation” and “protecting” the investors.

She gave her two cents on CFTC’s FinTech Initiative, LabCFTC, with an aim to learn about the technology and share regulatory concerns that they would have. Bowen said that this is the right approach, and added: 

“It’s a lot better to know what you are dealing with, rather than waiting for the next crisis to sit and try to tackle the problem. So I think being ahead of the game and being involved really makes sense.”

On the other hand, she added that the Treasury and the Federal Reserve have not taken the light touch approach towards the cryptocurrency space. The ‘light touch’ is a term used to describe an approach wherein the regulatory party does not take drastic measures relating to the evolution of the market. This is used to protect investors and allow innovation to flourish. She said:

“I don’t think the Fed sees cryptocurrencies as being a threat or a systemic risk. Well, I think the current administration and trade recovery accommodative to innovation and are asking for banker Corporation and collaboration.”

In terms of regulatory effort being focused on enforcement, when Bowen was asked if this was CFTC’s first priority or if it was the same with Financial Crimes Enforcement Network [FinCEN] and Office of Foreign Assets Control [OFAC] of the Treasury. To this, Bowen said that protecting the investors is the primary concern of all the investors and that it is “wise” for investors to look for enforcement. She said:

“So yeah, I think, protecting our investors. This is definitely the paramount concern all regulators and […] the fact that you’ve seen increased enforcement action, both at the SEC level with ICOs and CFTC.”

She went on to say that it is the best first line of defense to educate the people about the risks involved in cryptocurrencies. Virtual currencies are commodities but there is a “statutory gap” which does not grant the oversight of the underlying spot market for the Bitcoin-fiat onramp.

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