Business 26 March 2018

Erik Gibbs

Bitcoin futures watchdog sees budget cuts as SEC increases funding

As part of the federal government in the United States, the Commodity Futures Trading Commission (CFTC) has to fight for federal dollars like all other departments. It has been the recipient historically of a fair amount of working funds, but all of that changed with the passing of the new $1.3-trillion budget signed by President Donald Trump. The agency saw its budget decrease substantially while the Securities and Exchange Commission (SEC) saw its budget increase.

The CFTC has been a cryptocurrency proponent on Capitol Hill and this year made several appearances before congressional committees, touting the future of cryptocurrencies. The organization had granted approval in December 2017 to two companies looking to offer Bitcoin futures markets provided they adhered to federal securities laws. By the time the ink dried on the federal budget, the CFTC saw its funding reduced by a staggering $1 million.

It can’t be a coincidence that the SEC’s new budget jumped at the same time that it has proposed plans to regulate cryptocurrencies. While it’s not unheard of for an agency to receive more than it requests, it doesn’t happen that often. However, the SEC was given 3% more than it was looking for, and will have a total bank of $1.7 billion.

Jay Clayton, chairman of the SEC, isn’t what one would call a fan of cryptocurrencies and blockchains. The SEC has started to take a vested interest in how cryptocurrency is traded, and how initial coin offerings (ICOs) are introduced into the market. There has been talk that companies launching an ICO will have to report them as futures to the SEC.

CFTC Chairman J. Christopher Giancarlo had told members of the Senate in February, “We owe it to this new generation to respect their enthusiasm for virtual currencies, with a thoughtful and balanced response, and not a dismissive one.” The reduction in the budget left him, as well as many other cryptocurrency followers, shocked and concerned about the market’s future in the country.

There is a concern that, absent proper regulation, blockchain technology will become stagnant and not advance. CFTC Commissioner Rostin Behnam, in an email to Bloomberg, said, “CFTC cannot responsibly innovate and meet the needs of rapidly evolving markets and market participants absent additional funding.”

Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.

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