The marketplace for cryptocurrencies derivatives is expanding. Although still dominated by unregulated exchanges, it is gradually facing greater competition from regulated alternatives. Bakkt launched physically delivered bitcoin futures last September and CME, which first launched bitcoin futures in December 2017, opened trading for options contracts Monday.
The chairman of the Commodities and Futures Trading Commission (CFTC) believes regulated derivatives will instill market confidence in cryptocurrencies.
Chair Heath Tarbert told Cheddar Monday his agency is helping create a regulated futures market investors would be able to «rely on» for better «price discovery, hedging and risk management.»
«By allowing cryptocurrencies to come into the world of the CFTC,» investors can better access trusted and regulated financial products, improving overall confidence in the asset class, according to Tarbert. «It’s helping to legitimize digital assets, in my view, and add liquidity to these markets.»
In the interview, Tarbert reiterated that his perspective will only extend to cryptocurrencies the CFTC currently classifies as commodities. Appointed chairman last April, he has advocated for an open regulatory regime when it comes to cryptocurrencies.
In an op-ed published on the CFTC website November, Tarbert argued regulators should adopt a greater «principles-based approach» to the asset class. «The trick with digital assets is to foster the development of exciting new products while mitigating potential risks,» he wrote.
Rather than the regulator issuing prescriptive rules that companies need to follow, companies should develop commercially viable solutions that satisfy regulatory standards, he said.
The CFTC first defined bitcoin as a commodity in 2015, confirming the classification when it gave the go-ahead to CME and Cboe to launch regulated futures at the close of 2017. Ether was only confirmed as a commodity last October when Tarbert said that, as it hadn’t been treated as a security by the Securities and Exchange Commission (SEC), «it stands to reason» that it is most likely a commodity.
When asked by Cheddar whether any other cryptocurrencies, such as XRP, could soon be defined as commodities, Tarbert told investors «to watch this space» as the CFTC works closely with the SEC to «really think about which crypto falls in what box.»
Reggie Middleton Reaches $9.5 Million SEC Settlement Over ICO Fraud
The U.S. Securities and Exchange Commission (SEC) said it has reached a settlement with Reggie Middleton, organizer of the fraught $14.8 million Veritaseum (VERI) initial coin offering (ICO).
In a filing with the New York Eastern District Court, dated Oct. 31 and published today, Middleton agreed to the consent decree of the final judgment, without having to admit or deny the allegations, while waiving any right to appeal.
The settlement came three weeks after the court announced that it had entered into a discussion with Middleton to settle the case.
The defendant agreed to pay approximately $9.5 million to settle the case.
According to the SEC filing, Middleton has the obligation to pay disgorgement and prejudgment interest of $8.47 million, plus a civil penalty of $1 million.
The case concludes the long-running saga since 2017, with Middleton accused of allegedly raising millions of dollars through an initial coin offering without registering with the SEC, while misleading investors to attract more funds with false information.
A week after the raise, Middleton claimed a hacker stole 36,000 of its tokens, valued at $8 million, and subsequently exchanged them for ether, and the funds are still missing, according to the filing.
According to the initial complaint filed by the SEC, at multiple times, the defendant referred to the tokens as “software” or compared them to prepaid gift cards to be used on a technological platform.
The SEC also accused Middleton of manipulating the securities’ value post-ICO, and misappropriating at least $520,000 of investors’ money for personal use, the complaint said.
In an emergency action in August, the SECr froze Middleton’s assets and asked the court to prevent him from continuing to operate a public company or participating in a digital asset securities offering.
The case is one of the latest settlements for fraudulent ICOs. Data storage startup Sia negotiated a $225,000 settlement over its $120,000 raise on Oct.1, while EOS maker Block.One agreed to pay a $24 million penalty on a raise that totaled $4.1 billion on Sept 20.
