- Christopher Giancarlo, chair of CFTC testified before the US House Agriculture Committee on Wednesday. He said that the clearinghouses under the regulation of his agency are a critical singular point of risks is the global financial picture and they continue to grow and develop as per complexity. The US CFTC is optimistic that it will witness more companies choosing to become federally-okayed clearinghouses due to the thriving interest in cryptocurrencies.
What exactly are these clearinghouses?
Financial institutions that facilitate financial transactions between two parties are referred to as clearinghouses. Their job is to act as intermediaries and oversee the workings of these entities and assess any issues that may interfere with their ability to regulate their own risks. Giancarlo reaffirmed the importance of these assessments in his speech. He stated that these tests are a good measure of overall financial stability.
Some notable clearinghouses
LedgerX, the crypto derivative provider already doubles up as a clearinghouse. Other platforms like Bakkt and ErisX have been waiting patiently to hear back from the CFTC regarding their applications. The applications were filed to become derivatives clearing organizations (DCOs), which is a necessary designation required before you can function as a clearinghouse.
More from Giancarlo’s speech
Giancarlo also appealed to CFTC’s Fintech research hand – LabCFTC – to keep up with technological advancements.
The chairman underlined that blockchain and cryptocurrencies are both rapidly growing sectors. It was thanks to the LabCFTC that the regulator could prepare for some of the ongoing development and intimate them as to how to proceed best given the circumstances.
The CFTC has been successful in independently analyzing market data without resorting to the help of any market intermediaries and self-regulatory organizations.
It has also been able to predict the importance of technological innovations, putting forward the example of crypto-asset-based futures products.
LedgerX, ErisX, Seed CX and Intercontinental Exchange’s Bakkt have all decided to provide physically-settled bitcoin futures and so on, right from when they achieve all requisite regulatory approvals. CME and Cboe had both made announcements of their plans to launch cash-settled futures products towards the end of 2017.
The only thing to do now is to wait and see what becomes of these plans. One thing is for sure – cryptocurrency is not slowing down its pace of growth anytime soon. Companies have found a way to capitalize on this for their own profits and why shouldn’t they?
Andrej Burcev got into Crypto while completing his Bachelor of Science at Kingston University in London. Andrej now works as Senior Software Engineer. He is currently collaborating and writing articles for TheDailyCoins with his focus in innovative technology and its cultural and social influence.