Commodity Futures Trading Commission Chairman Rostin Behnam said nothing has happened in the past year to prevent new FTXs.
Cryptocurrency exchange FTX filed for bankruptcy last year and its founder, Sam Bankman Fried, was found guilty on all seven criminal charges, including fraud. However, Benham also emphasized that the crypto market has changed significantly since the collapse of FTX, and the excitement has disappeared.
“Is it possible that an event like FTX will happen again?” he added. “I don’t want to say never, but market trends are very different than they were a year ago, let alone two or three years ago.”
Mr. Behnum spoke at the Financial Markets Quality Conference on November 15, hosted by Georgetown University’s Psaros Center for Financial Markets and Policy.
Daniel Gorfein, founder of consultancy Gattaca Horizons and adjunct professor at Georgetown Law, said during a panel discussion on digital assets at the conference that the past few months have revealed the limits of enforcement-based regulation. Therefore, some kind of comprehensive federal legislation is needed that provides clear definitions and adequate market oversight.
For example, in August of this year, a court ruled against the U.S. Securities and Exchange Commission in favor of digital currency asset manager Grayscale Investments. Grayscale files suit challenging SEC decision to deny conversion of Grayscale Bitcoin Trust into an exchange-traded fund, even though regulators approved Bitcoin futures exchange-traded fund (ETF) I was awake.
David Laval, global head of ETFs at Grayscale Investments, said in a panel discussion that the asset manager believes its products are best positioned to be converted into ETFs and listed on the New York Stock Exchange. Stated.
“We are very close to bringing a spot Bitcoin ETF to market,” Laval added. “We are on the precipice of something that is very lucrative for investors and has been in demand for some time.”
He continued that the SEC’s job is difficult because providing investor protection is a very broad mission. However, regulators’ approval of Bitcoin futures ETFs indicates that they feel there is sufficient oversight in the underlying spot market, so this is a spot that was the basis for the lawsuit. This is not a valid reason to refuse approval of a Bitcoin ETF.
“We are raising our hands and saying we need more regulation,” Laval added. “We would like to register our product and operate it as an ETF on the New York Stock Exchange, one of the most regulated markets in the world.”
The ETF structure provides access to a marketplace of advisors that includes registered investment advisors, independent wealth managers, broker-dealer wirehouses, and the wealth management platforms of major world banks. Laval said Grayscale envisions its Bitcoin ETF product to be brought to market in a similar manner to the largest physical gold ETF, launched in 2004, with similar complexities in terms of custody and custody. He said there was.
“With this investment wrapper battle-tested in up, down, and sideways markets and an infrastructure of high-quality market makers, liquidity providers, global banks, and accredited participants, investors can feel confident. “They will be able to invest in Bitcoin with their own money,” he said. Laval.
Jason Monk, director of capital markets and digital asset product strategy at Invesco, said in a panel discussion that from an asset manager’s perspective, blockchain technology can bring traditionally static assets to life and He said it could increase access to assets that didn’t exist. Clear liquidity mechanism.
“Tokenization of private market assets is very interesting, where it makes sense,” Monk added. “We just need to find effective ways to make it happen without negatively impacting the underlying strategy.”
For example, private equity firms may not want their companies to be traded 24/7 because they need time to make changes and increase value before being available for liquidity events. .
Gofein explained that tokenization is the creation of digital bearer products that offer benefits such as accelerated clearing and settlement and reduced counterparty risk.
“The blockchain conversation is about new transaction rails,” he added. “Tokenized assets can move on traditional rails, or you can think about distributed ledgers that move on interoperable and potentially open public systems.”
Public blockchains come with more risks, but they also have advantages in terms of access and the ability to communicate between different entities.
“I think all of these innovations are really important,” Gorfein said. “I think they will move gradually and change the way most types of financial assets and instruments are traded.”
Laval emphasized that stablecoins can fill that gap. between digital assets operating on one rail and fiat currencies or cash operating on a completely different rail.
“Stablecoin regulation should be fairly simple and modeled after banking supervision, which audits and checks reserves,” Gofein said.
voluntary carbon market
Behrman also said the CFTC is drafting guidance on the voluntary carbon offset market that has emerged in recent years and hopes to issue it by the end of November, subject to approval.
Carbon markets are based on trading allowances that allow companies to offset their carbon emissions, and are divided into compliance and voluntary categories. Compliance markets tend to be used by governments to establish carbon prices through legislation or regulation by controlling the supply of credits traded within regulated emissions trading systems (ETS). In contrast, voluntary markets are not legally mandated.
“The problem with this market is that it lacks integrity, is unregulated, and has questionable scientific methodology and measurement of impact,” he added.
However, CFTC-registered companies list carbon futures that reference the underlying physical market.
“So we want to set the standard for this market, value integrity and trustworthiness, and hopefully grow it to help us meet our climate goals,” Benham said.