The Commodity Futures Trading Commission (CFTC) has permitted its employees to invest in cryptocurrencies, reported Bloomberg. This decision came weeks after the commodity watchdog took the responsibility of overseeing the Bitcoin futures market.
However, any investment in Bitcoin futures that the CFTC policies, along with the buying and selling on margins, are prohibited because of the regulator’s ethics guidelines.
This decision was taken after the ethics office of the CFTC received numerous queries from its staff asking about the legality and the morality of involvement in such trading practices, according to a memo issued on the 5th of February by Daniel Davis, the agency’s general counsel.
The CFTC only regulates the futures contracts derived from the commodity market, not the market itself. The agency sees Bitcoin and other cryptocurrencies as commodities, and so any investment on them not involving futures is considered legal. However, Mr. Davis’ memo warned against any attempted insider trading on the part of CFTC employees.
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An excerpt from the memo noted: “In this environment, the situation is ripe for the public to question the personal ethics of employees engaging in cryptocurrency transactions.”
“Please keep in mind that you must endeavor to avoid any actions creating the appearance that you are violating the law or government and commission ethical standards,” it added.
CFTC spokesperson Erica Richardson said that Mr. Giancarlo himself asked for the ethics guidance, as he wanted to confirm that agency staff dealing with digital coins are not investing in cryptocurrencies as this might create a conflict of interest.
“The chairman has made it clear that staff members who own Bitcoin should not participate in matters related to Bitcoin, as it presents a conflict of interest,” Bloomberg quoted Ms. Richardson.
Mr. Giancarlo became a popular personality in the cryptocurrency community after his speech earlier this month before the US Senate committee endorsing cryptocurrencies.
The decision on the part of the regulatory body is already attracting a lot of criticism. Bloomberg quoted Angela Walch, an associate professor who specializes in digital money and financial stability at St. Mary’s University School of Law: “This is actually mind-boggling that they are allowing investing in this at all. It could absolutely skew their regulatory decisions.”