Recently, Sharon Bowen, Former CFTC Commissioner, spoke at the Bloomberg conference about the biggest challenge for CFTC in the future, and transparency as a solution to a vibrant financial market.
Earlier, Bowen had spoken about the regulators focussing on protecting the investors from fraudulent manipulation and educating the people about the risks involved in dealing with cryptocurrencies. She also supports LabCFTC’s approach of understanding the technology and sharing the regulatory concerns.
Furthermore, she stated that banks will not hold cryptocurrency assets on their balance sheet anytime soon. She added that banks need to consider the liquidity steer, are subject to capital rules and stress tests and also are required to keep 1250% dollar for dollar capital for each crypto asset. She stated:
“No bank is going to want to, it is not allowed to frankly and some banks cannot set aside dollar for dollar in 1250% for a highly liquid asset”
When asked about the most effective strategy that lawmakers could use to create this regulated space, she said:
“We have applications to have regulated transparent exchanges and that’s important. I think that’s sort of the very first step that they will you know confidence and trust are the two main ingredients to a healthy vibrant environment financial ecosystem.”
And she agrees that the CFTC bringing this in means that a class will move forward. However, she also stated that there will be a vibrant market only when there is transparency and protection from hacking, which will build trust.
Fidelity recently launched a cryptocurrency trading platform that will bring cryptocurrency trading to institutional investors and manage custody for cryptocurrencies like Bitcoin [BTC]. Giving the example for Fidelity and cryptocurrency exchanges expanding all over the world, Bowen said that cryptocurrencies have “definitely got legs, I think growing legs.”
According to her, moving forward, the biggest challenge for the CFTC would be the resource constraint but she remains optimistic about the future of cryptocurrencies in the market. She stated:
“The jury’s still out you know frankly I’m optimistic in terms of where I see this heading, but it’s always, I think, you know, transparency is always the solution to a vibrant market.”
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