The CFTC Technology Advisory Committee has added blockchain to its topics of discussion for a Wednesday meeting, tapping industry players including R3’s Charley Cooper to participate. R3 is the startup behind Corda, the open-source distributed ledger technology (DLT) project geared toward financial services by which the likes of Credit Suisse, Wells Fargo and others have completed a proof of concept on challenges tied to data-sharing in mortgage-backed securities.
The CFTC, the US futures and options markets watchdog that paved the way for bitcoin futures to launch, is tackling blockchain and the potential applications of distributed ledger technology for the derivatives markets. Bitcoin futures beat their exchange-traded fund products to the market, with securities regulators blocking the latter given its appeal to Main Street investors. Bitcoin futures, meanwhile, fall into the derivatives camp, which is a more sophisticated product with fewer restrictions.
R3 vs. Ripple
R3 competes with Ripple and will be going head-to-head with the XRP founder by developing its own DLT-fueled cross-border payments platform. The two companies are locked in a legal dispute over an options contract whose value has climbed from $1.1 billion to more than $16 billion alongside the price of the XRP currency at its peak. R3 was contracted to purchase 5 billion XRP at a preset price through September 2019, but Ripple reportedly reneged on that agreement.
Not to be outdone, virtual currencies also have a place on the CFTC’s Feb. 14 agenda to discuss “virtual currencies, related futures products, and market and regulatory developments and challenges.” For that discussion, they’re bringing in Jerry Brito, executive director of nonprofit Coin Center, which is an advocacy group for cryptocurrencies.
While details of the meeting remain sparse, the Coin Center in recent weeks published a blog on how regulators can provide oversight to the market without stifling innovation. They pulled from the guidelines from the Bill Clinton era in the nineties during the dot-com craze in which the policies dictate that:
“[The] private sector should lead,” that “governments should avoid undue restrictions on electronic commerce” and that “where governmental involvement is needed, its aim should be to support and enforce a predictable, minimalist, consistent and simple legal environment for commerce.”
As long as they are aligning themselves with organizations that are engaged in digital coins and the technology that drives them, regulators such as the CFTC will remain equipped for discussions with lawmakers, such as at the recent hearing on Capitol Hill to discuss regulation. That event was largely seen as a win for cryptocurrencies, particularly in light of CFTC chairman Christopher Giancarlo’s intrigue about the budding industry.
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