Andrew Busch — the Chief Market Intelligence Officer for the United States’ Commodities Futures Trading Commission (CFTC) — noted during a recent interview on CNBC how it’s going to be an interesting challenge to prevent institutional manipulation of the bitcoin price through the use of Bitcoin futures.
Futures, indeed, have been all the rage in the crypto ecosystem in recent weeks, as powerhouse traditional U.S. exchanges like the Nasdaq and the Chicago Mercantile Exchange (CME) Group have announced their decision to launch Bitcoin futures in the weeks ahead.
Busch is optimistic but knows the road ahead is going to be engrossing:
“What we’re trying to do is show people that the exchanges [are] the ones looking at the underlying cash contract to make sure it’s not manipulated. Our role as a derivatives regulator is to make sure the futures contract is not manipulated.”
“We’re going to do that for sure. And we’re going to continue to work with the exchanges just to make sure bitcoin is not manipulated in its use on the exchanges.”
The largest derivatives exchange operator in the world CME Group received approval from the U.S. Commodity Futures Trading Commission (CFTC) to begin trading bitcoin futures. The #Bitcoin futures contract will launch on Monday, December 18th! pic.twitter.com/RRHZifRZEt
— Blockchainlife (@Blockchainlife) December 1, 2017
The decentralized, premature, and horizontal nature of the crypto space makes it particularly vulnerable to volatility and manipulation as it stands — a dynamic that will interact with the coming wave of Bitcoin futures in ways no one can really foresee just yet.
As Busch notes:
“This is really important for people to understand looking at bitcoin: the underlying cash market is not regulated at this point.”
“And I think it’s important for investors and everybody else looking at bitcoin and other currencies to keep that in mind when they’re trying to make a decision on what to do with it.”
For now, no one’s quite sure what comes next.
A growing murmur in the community has been concerns over whether Bitcoin futures will actually work to suppress the bitcoin price in the mid- and long-term.
But, if Busch and the rest of the CFTC keep their guard up, American crypto users can rest easy knowing in the very least that egregious bouts of institutional manipulation will seemingly be clamped down upon.
Until then, we all wait and see.
TLDR: A top regulator with the CFTC says the coming wave of Bitcoin futures offerings from financial institutions could be used to manipulate the bitcoin price.