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January 17, 2024
Bitcoin ETFs and the CFTC?

The Commodity Futures Trading Commission (CFTC) has provided insights on Bitcoin ETFs, particularly Bitcoin Futures ETFs. These ETFs issue publicly traded securities that offer exposure to the price movements of bitcoin futures contracts.

Bitcoin is considered a commodity and is the underlying asset in bitcoin futures contracts.

Bitcoins that sell for cash are said to trade on the “spot” market. With limited exceptions, the bitcoin spot market is not regulated by the CFTC or the SEC.

Bitcoin futures contracts — like other commodity futures contracts such as corn futures, market index futures, or gold futures — are regulated by the CFTC and must trade on CFTC-regulated exchanges.

ETFs are investment companies regulated by the SEC. The shares issued by the ETF are securities that must be registered with the SEC. Like mutual funds, ETFs have stated investment objectives and use professional money managers to meet those objectives. In the case of managed commodity futures funds, though, investment companies commonly set up subsidiaries that serve as commodity pools.

A commodity pool is an investment trust or similar entity that trades commodity futures contracts for the benefit of investors. The CFTC regulates commodity trading advisors and commodity pool operators—the people who make trading decisions and run the pools, respectively.

Today, there are 18,142 cryptocurrencies, 460 crypto-exchanges and the market cap of cryptocurrencies amounts to $1.7 trillion. Every 24 hours, $91 billion worth of cryptos are traded, most of them Bitcoin or Ethereum.

Given the size of the industry and the impending regulatory push, it is worth now taking stock of the current state of regulation. In doing so, it will become clear that a globally coordinated approach to regulation is necessary.

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Resources used:

CustomerAdvisory: Understand the Risks of Virtual Currency Trading | CFTC

Article:What is a Bitcoin Futures ETF? | CFTC

Whatis the current state of cryptocurrency regulation? | World Economic Forum(weforum.org)

Key Terms: Bitcoin, Cftc, Etf, Commodity, Futures

RegVerse Team