CFTC Approves Bitcoin Options Trading

July 10, 2017, Written By John H. Oldshue

In the U.S., states have taken a more proactive approach to regulating Bitcoin currency than federal regulators, but that is starting to change. The Commodity Futures Trading Commission (CFTC) has approved the creation of the first Swap Execution Facility (SEF), which allows traders to trade in the bitcoin derivatives market. SEFs, which were created under Dodd-Frank, bring tighter regulations to the derivatives market.

The CFTC is better equipped to handle regulating the trading of Bitcoin and other cryptocurrencies, as it covers all forms of bets and trades, regardless of classification. Thus, they can regulate cryptocurrencies under existing rules instead of creating new ones, which the Securities and Exchange Commission (SEC), for example, would find hard to do since they handle the purchase and sale of specific assets. Assets are classified differently, and thus, face different rules.

It is good news that a federal regulating body is taking charge of cryptocurrencies. Currently, since states are primarily responsible for regulating the trade of Bitcoin, there are no universal rules, and each governing body is pursuing its own agenda and classifying cryptocurrencies differently. Without universal rules, businesses that trade in cryptocurrencies will have few legal rules and protections.

The CFTC allowed TeraExchange, a cryptocurrency clearing platform, permission to trade in digital currency derivatives, such as Bitcoin, last year. They just granted this same permission to LedgerX, which makes experts believe the CFTC will license even more traders in the coming months and years.



The information contained within this article was accurate as of July 10, 2017. For up-to-date
information on any of the terms, cards or offers mentioned above, visit the issuer's website.