During a speech last month, CFTC Chairman Christopher Giancarlo said, “In crafting its process of heightened review for compliance with core principles, CFTC staff prioritized visibility and monitoring of markets for bitcoin derivatives and underlying settlement reference rates.”
Giancarlo noted that digital currency particularly bitcoin “took the world by storm.” He cited the fact that bitcoin’s value increased 1,375% last year.
Additionally, Giancarlo said many of the claimed advantages for bitcoin are quite scant. On the other hand, critics argue that the cryptocurrency is “overblown and resembles a fever, even a mania.” They considered bitcoin’s high valuation similar to the famous “Tulip Bubble” of the 17th century.
Furthermore, Giancarlo said the CFTC alerted the public regarding the “considerable risks” associated with cryptocurrencies such as bitcoin. These include:
- operational risks of unregulated and unsupervised trading platforms;
- cybersecurity risks of hackable trading platforms and virtual currency wallets;
- speculative risks of extremely volatile price moves; and
- fraud and manipulation risks through traditional market abuses of pump and dump schemes, insider trading, false disclosure, Ponzi schemes and other forms of investor fraud and market manipulation.
Moreover, Giancarlo said the CFTC filed civil enforcement actions against entities engaged cryptocurrency fraud and market abuse.
