Bitcoin as a Commodity: CFTC Considers 24/7 Derivatives Trading
Bitcoin, the leading asset in the crypto sector, is officially recognized by U.S. regulators and courts as a commodity, falling under the jurisdiction of the Commodity Futures Trading Commission (CFTC). The agency is now seeking public comments on the possibility of opening up the world of derivatives to round-the-clock trading, following the footsteps of bitcoin and other digital assets.
While the CFTC is on track to become a key regulator in the crypto market under ongoing Congressional efforts to establish industry regulations, the recent call for comments does not explicitly address digital assets oversight. The agency’s request highlights the increasing demand from CFTC-regulated firms to facilitate transactions at all hours, driven by technological advancements and market trends.
Acting Chairman Caroline Pham emphasized the importance of a forward-looking approach to market shifts in ensuring market vibrancy and resilience while safeguarding all participants. With the Senate confirmation of chairman nominee Brian Quintenz pending, Pham is leading the agency in exploring the implications of continuous trading in the market.
The transition to 24/7 trading poses various challenges for traditional U.S. markets, including governance frameworks, staffing models, and technological requirements to maintain market integrity and compliance with core principles. Firms would need to address issues such as live maintenance, technology updates, and human monitoring during extended trading hours, similar to practices already in place for digital asset operations.
While the CFTC may not have direct oversight of spot-market trading for bitcoin and other non-securities tokens, it plays a crucial role in regulating platforms and firms handling customer transactions. This space already operates on a 24/7 model, requiring constant vigilance and adherence to regulatory standards.