BitOoda Global & Regulatory Analysis, 11/18/2019: Invest: NYC Focus On Derivatives
BitOoda Global & Regulatory Analysis, 11/18/2019: Invest: NYC Focus on Derivatives
Lots of regulatory developments coming out of Invest: NYC. As always, we will try to stay above the fray of the mainstream crypto media and analyze a broader question with implications that will help our clients and partners better strategize and navigate the changing space: will the CFTC (and Congress) evolve to meet the growing push by industry participants to self-regulate and expand the range of derivative products available in the U.S. market? A few points to set the stage:
- Both Bakkt and CME Group have announced plans to launch a regulated options contract for bitcoin futures, while Bakkt also is launching cash-settled futures through ICE Clear Singapore and a consumer app, as it continues to set volume records for futures contracts.
- The Association for Digital Asset Markets (ADAM) launched the draft of the group’s Code of Conduct for digital asset trading, and also added five firms to its membership, in a bid to advance the industry’s ability to self-regulate and operate by a common set of standards. BitOoda is a founding member of the group.
- CFTC Chairman Heath Tarbert backed off his refreshingly-clear statement that ether is a commodity and his prediction that ether futures were possible in the next year, clarifying that the CFTC and SEC were “thinking carefully” about whether the upcoming shift from proof-of-work (PoW) to proof-of-stake (PoS) — ETH 2.0 — would modify the degree of centralization such that its classification is not as clearly defined. (Editorial comment: at least Tarbert is being open about their thinking and the questions they’re considering, rather than just laying out enforcement actions without any real explanation.)
- Finally, we saw some actual movement in Congress on digital asset-related legislation, as the House will soon vote on a bill passed by the Agriculture Committee that would clarify how the CFTC would collect information on crypto derivatives.
We noted the contrast between these advancements and the latest on the SEC front, where Kik is pushing to depose high-ranking SEC officials to gain insight into the Commission’s approach to crypto regulation, and Telegram is refuting the SEC’s charges against it, claiming that the Commission is ‘regulating by enforcement’ and failed to provide guidance on its application of securities laws to digital assets.
Which is why we are merging these potentially-disparate data points to hypothesize that the growth of crypto derivatives in the U.S. — particularly as American firms increasingly push into Asia — will continue to represent the sector in which we will see real growth and expansion both in terms of volume and the diversity and sophistication of products and platforms. BitOoda is well positioned to not only drive the macro-level advancement of regulatory standards and industry infrastructure through our role on ADAM and our close partnerships with Bakkt and other market leaders, but also to continue pioneering new derivative products and conceiving bespoke strategies for our clients. Please reach out to discuss our latest successes and our thoughts on upcoming opportunities.