The Commissioner for the US Commodity Futures Trading Commission (CFTC), Mark P. Wetjen, has indicated that his agency has authority to take action against bitcoin price manipulation, saying the CFTC’s definition of a commodity is very broad. His comments were made during a panel discussion at a seminar on digital currency organized by Bloomberg in New York:
“It has not been tested, but I do believe we have the authority because if you think of any reasonable reading of our statute, bitcoin classifies as a commodity. This gives us the authority to bring enforcement against any type of manipulation.”
The panel was also attended by Jennifer Shasky Calvery, director of FinCEN, who praised Ben Lawsky’s BitLicense initiative. Also present was former Securities and Exchange Commissioner Arthur Levitt, who recently joined BitPay and Vaurum as advisor.
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The warning comes during a time of heightened concern over price manipulation in capital markets. Regulators have fined banks a total of $4.3 billion to date as part of the recent investigation into FX rate rigging. $1.4 billion was levied by the CFTC.
Bitcoin trading is currently unregulated, so it is not impossible that price manipulation already takes place. But enforcement may be difficult- the CFTC is likely to encounter challenges in gaining exchange cooperation and proving misconduct- whose definition may be open to interpretation, especially in a volatile bitcoin market. In addition, customers trading on exchanges not dealing in fiat at all don’t have to identify themselves, making enforcement on these venues practically impossible.
Last month, the CFTC tapped industry experts as part of exploring bitcoins as an asset class.