CFTC Gives Employees Permission to Trade in Cryptocurrencies
The U.S. Commodities Futures Trading Commission (CFTC) has reportedly given its employees permission to invest in digital currencies.
In a report from Bloomberg, CFTC workers are only allowed to trade in the market as long as they haven’t received insider information and they can’t purchase them on margin. Investing in Bitcoin futures is also a no-go area under the CFTC’s ethics guidance.
According to an employee memo, Daniel Davies, the agency’s general counsel, said that the guidelines were being issued after the ethics office had received ‘numerous inquiries’ about whether investing in cryptocurrencies was allowed.
Erica Richardson, a spokeswoman for J. Christopher Giancarlo, CFTC Chairman, explained that Giancarlo was among those asking for guidance from the commission’s ethics office. According to Richardson, the CFTC chairman doesn’t want employees investing in digital currencies who are dealing with regulations and investigations surrounding them, adding:
“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.”
Last year, the CFTC took the step of permitting two U.S. exchanges to offer Bitcoin futures – Chicago exchanges CME and CBoE – helping to push the agency to the front of cryptocurrency oversight.
In his memo, Davies notes that employees shouldn’t invest if they have information that isn’t readily available to the public. This could include working on crypto regulation or an enforcement case.
“In this environment, the situation is ripe for the public to question the personal ethics of employees engaging in cryptocurrency transactions,” Davis wrote. “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.”
The U.S. Securities and Exchange Commission (SEC) has also permitted its employees to invest in cryptocurrencies. According to Bloomberg, the SEC’s decision is largely limited to initial coin offerings (ICOs); however SEC employees can’t invest in them until seven days after the ICO has ended.
Regarding the CFTC’s decision to permit its employees to trade in digital currencies, Angela Walch, an associate professor who specializes in digital money and financial stability at St. Mary’s University School of Law, said:
“This is actually mind-boggling that they are allowing investing in this at all. It could absolutely skew their regulatory decisions.”