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Home»BITCOIN NEWS»CFTC chairman raises concerns about ‘thin regulation’ of Bitcoin ETFs, warns of risks to market health
BITCOIN NEWS

CFTC chairman raises concerns about ‘thin regulation’ of Bitcoin ETFs, warns of risks to market health

By Crypto FlexsJanuary 27, 20243 Mins Read
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CFTC chairman raises concerns about ‘thin regulation’ of Bitcoin ETFs, warns of risks to market health
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In a long-awaited move, Bitcoin ETFs have finally entered the market. approval However, Commodity Futures Trading Commission (CFTC) Chairman Rostin Behnam expressed concerns about the regulatory environment surrounding these new index funds.

CFTC Chairman Questions Suitability of Bitcoin ETF

in keynote In a report published on Friday, Behnam emphasized that while the SEC’s approval was considered an important step in the development of the digital asset market, there are still a number of “unresolved issues” in the digital asset cash market.

These concerns include trade settlements, conflicts of interest, data reporting; cyber securityCustomer protection, transparency and general market integrity.

Although Bitcoin ETFs have achieved legal certainty, allowing them to target a wider audience, Behnam highlights the lack of “concrete action” to address these market challenges.

The CFTC chairman points out that Bitcoin’s speculative and volatile nature is wrapped in a “thin layer of indirect regulation,” presenting it as a “shiny” new product. This ultimately raises questions about its suitability for the public. market participation According to Behnam, there are potential risks to market stability.

Is a regulatory crackdown imminent?

Behnam explains that barriers to effectively regulating the emerging Bitcoin ETF market are often rooted in fears of legalization. He argues that legislation alone cannot ensure legality, as the SEC’s decision demonstrates..

Using a racing analogy, the CFTC Chairman emphasizes that having a license does not automatically make someone a legal driver. “They have to demonstrate their skills and prove their worth within a set scope.”

Behnam emphasizes that Congress has not granted federal regulators authority over cash markets for digital assets. Even regulated products, such as Bitcoin futures, determine legitimacy based on market participant demand for the product rather than through a self-certification process.

Behnam emphasizes the role of exchanges in developing and enforcing standards. derivativesIt is based on unique knowledge of the underlying markets and close relationships with market participants.

Behnam added that the lack of legislation has not hindered enthusiasm for digital assets. However, he expressed concern that the regulatory approval of Bitcoin ETFs could lead market participants, both retail and institutional, to incorrectly assume that these products are subject to the comprehensive regulatory oversight of the cash commodity digital asset space.

To address these concerns and ensure the integrity of the Bitcoin ETF market, Behnam emphasized the need for action, calling for federal legislation governing cash market digital assets. Behnam concluded:

Over the past six years, the concerns I have publicly expressed regarding spot markets for digital assets have grown stronger. The need for federal legislation on cash market digital assets has never been more important, and I will continue to call for action.

The daily chart shows the price recovery of BTC. Source: TradingView.com BTCUSDT

After a period of significant elevation selling pressure, the market’s largest cryptocurrency experienced a sharp price correction. However, BTC rebounded to the $41,700 level after reaching a low of $38,500 on Tuesday.

It is unclear what further action regulators will take regarding the nascent cryptocurrency market, particularly with regard to the SEC’s approval of the Bitcoin ETF.

The impact of these measures on trading and the participation of new investors is yet to be determined and could have both positive and negative impacts.

Featured image from Shutterstock, chart from TradingView.com

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