As governments across the globe ease up on crypto-regulations, former CFTC Chairman Christopher Giancarlo featured on the latest edition of the Unchained podcast to contrast existing market conditions with the direction needed by the crypto-space to attain mass adoption. Giancarlo also spoke about how the government had been vigilant about Bitcoin’s growth, right from its dormancy.
In doing so, Giancarlo highlighted that from its creation till the first quarter of 2017, Bitcoin was traded in consistent correlation to its fundamentals – the cost of production. At the beginning of the second quarter of 2017 however, “that correlation broke and Bitcoin was headed straight upward.” Determined to break the “bubble,” the CFTC decided to introduce Bitcoin Futures. Speaking about the sudden drop in Bitcoin’s price, Giancarlo stated,
“Volatility is not unique to Bitcoin but a return to its correlation with its cost of production was one of the results of the self certification of Bitcoin futures by the two leading operators.”
Additionally, Giancarlo claimed that Bitcoin Futures brought “a degree of transparency” to the market, something which was widely important and was not delivered by unregulated spot exchanges. Moreover, the former CFTC chairman highlighted that the SEC and CFTC’s jurisdiction predates over 80 years, which was “written in an analogue world, and the world has changed so dramatically.” He said,
“Both the SEC and the CFTC must, as best as they can, work with an old statutory framework and try to find a way to repurpose it for a vastly different digital marketplace: a digital securities marketplace, a digital commodities marketplace.”
Hinting towards what to expect from individual regulators, Giancarlo stated that the CFTC stands as a principle-based regulator that holds a long tradition of looking at statutory framework, while the SEC is a rules-based regulator that cannot repurpose existing rules to suit a digital environment.