In a recent interview with Cheddar, Heath Tarbert, Chairman of the CFTC, sat down to talk about Phase 1 of the upcoming U.S.-China trade deal, slated to be signed on Wednesday of this week.
According to Tarbert, the trade deal will “be an immense success,” and that once the agreement is signed, we’ll start to see U.S. markets, such as energy and agriculture, coming back to where they were initially before the trade war with China began a few years ago.
Tarbert also talks about his primary concern as the Chair of the CFTC: making sure that commodities, such as Bitcoin and Ether, are safe and accessible for everyone in all areas of industry.
Could this be the much-needed push to help bring legitimacy and widespread adoption to cryptocurrency derivatives?
While the future is still uncertain for many crypto derivatives, Tarbert believes that yes, regulation is the solution that we’ve all been waiting for.
On Cryptocurrency and Digital Assets
Today, there is an ever-expanding market for cryptocurrency derivatives.
But the issue is that these marketplaces are more-or-less unregulated exchanges. This, combined with the competition from their regulated counterparts, makes investors rather leery about investing in digital products.
According to Tarbert, one of the biggest complaints from market participants is that they need more clarity when it comes to cryptocurrencies. As it stands, Bitcoin and Ether are the only two cryptocurrencies currently sanctioned by the CFTC as commodities. All others are presently unregulated digital assets, which raises a major red flag for most investors.
On the other hand, Tarbert states that by regulating these (Bitcoin and Ether), and other cryptocurrency derivatives, the futures markets will be allowed to develop according to these digital products, making them safer and more accessible than ever before.
In other words, in the future, market participants would be able to rely on the futures markets when purchasing cryptocurrencies and other digital assets.
The futures markets have been around for a long time. Therefore, investors would be able to rely on them for reassurance, as well as “price discovery, hedging, and risk management.”
Altogether, Tarbert’s opinion is that the CFTC is currently working to “legitimize and add liquidity to these (cryptocurrency) markets.”
A Brighter Future For Crypto?
Although many observers believe that regulation goes against the very principles of cryptocurrency itself, Tarbert thinks that the regulation of cryptocurrency derivatives will, “create a market for digital assets.”
Regulations might irk some market participants. But, regulation could also represent a golden opportunity for cryptocurrency derivatives to take the world by storm.
For example, when the U.S.- China trade war first started a few years ago, the U.S. government provided massive bailouts to the agriculture sector, which was heavily affected by the tensions between the two countries.
But at the time, if there had been more regulated cryptocurrencies available, farmers and ranchers might have had other options, rather than accepting the government bailout.
In the end, the regulation of cryptocurrency derivatives isn’t going to close doors, it’s going to open them. And make digital assets safer and more accessible for anyone who could benefit from investing.