CFTC Chair: Cryptocurrencies Bring New Applications for Clearinghouse Registration


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In his testimony before the House Committee on Agriculture Subcommittee on Commodity Exchanges, Energy and Credit Washington, D.C., May 1, 2019, CFTC chairman J. Cristopher Giancarlo asserted that the mounting interest in cryptocurrencies might bring new applications for clearinghouse registration.

For the uninitiated, a clearinghouse is a financial institution that acts as an intermediary to look over transactions carried out between two entities and ensure a smooth settlement.

Four Cornerstones of CFTC

Commodity Futures Trading Commission (CFTC) chairman, J. Christopher Giancarlo stated in his testimony that the examinations of clearinghouses help identify the issues that affect a clearinghouse’s ability to control and monitor its risks.

He expressed his concern about the increasing number of clearinghouses, the scope, and complexity of the examination issues and its impact on the overall financial stability.

To this, he said:

“The Commission anticipates new applications for clearinghouse registration resulting from the explosion of interest in cryptocurrencies; an area in which protection of the cryptocurrencies will be one of the highest risks.”

Giancarlo also addressed the four cornerstones over which the CFTC’s response to the rapidly growing market and technological advancements, including blockchain are cryptocurrencies, were built.

They include the adoption of exponential growth mindset, becoming a quantitative regulator, embracing market-based solutions, and establishing an internal FinTech Stakeholder to address the opportunities and challenges.

CFTC’s Brewing Interest in Blockchain and Cryptocurrencies

The CFTC has consistently had its eyes on blockchain and cryptocurrency technology.

As BTCManager reported December 12, 2018, the CFTC published a press release seeking advice from the crypto community to better understand the cryptocurrency and blockchain industry, paying special attention to the Ethereum network.

The financial authority was hopeful for the feedback to help LabCFTC, their fintech initiative, to design market-enhancing financial technology.

He said that LabCFTC was an initiative to explain technology innovation to their staff and other regulators and advocating the technology adoption. It was also an initiative to help them reach out and learn about evolving technologies while providing dedicated liaison to innovators.

In another speech titled “Improving the Past, Tackling the Present, and Advancing to a Digital Market Future,” Giancarlo acknowledged that the blockchain and cryptocurrency technology were disrupting the global markets.

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