After a period of internal procedural review, the United States Commodity Futures Trading Commission will permit its employees to trade in cryptocurrencies.
However, CFTC employees will still be prohibited from trading in Bitcoin futures.
The CFTC, along with the Securities and Exchange Commission, act as the regulators and legislative overseers of assets and commodities on a nationwide basis.
Daniel Davis, the CFTC’s general counsel and top lawyer, stated in a publicly released memo that the decision was partly influenced by, “numerous inquiries” by CFTC employees about cryptocurrency trading options.
Davis sternly warned CFTC employees within the same memo to abide by CFTC ethical standards and to be cognizant of professional appearances.
“In this environment, the situation is ripe for the public to question the personal ethics of employees engaging in cryptocurrency transactions,” wrote Davis.
“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,” wrote Davis.
Numerous federal agencies are legislatively struggling with how to legally impose regulations and rules on cryptocurrencies.
Cryptocurrencies are prone to wild, whipsawing valuation swings. They are created anonymously online without any means of verification and can be used to clandestinely fund criminal activities.
Most federal officials are extremely wary of officially approving cryptocurrency trading across the board.
Conflicts of interest
Industry critics of the ruling are concerned as the decision could lead to much more lenient oversight and outright corruption.
They are especially concerned since the CFTC’s decision to allow its employees to trade in cryptocurrencies was made only mere weeks after the CFTC began to formally regulate and oversee Bitcoin futures.
“This is actually mind-boggling that they are allowing investing in this at all,” Angela Walch, an associate professor at St. Mary’s University School of Law, told Bloomberg News. “It could absolutely skew their regulatory decisions.”
Richard Painter, an expert in securities law and a former White House ethics lawyer under former President George W. Bush, roundly criticized the CFTC decision.
Painter said that the CFTC’s focus should be on legislatively regulating cryptocurrencies, not allowing the employees in charge of doing such to then speculate in them.
“This just looks terrible,” said Painter.
Christopher Giancarlo, Chairman of the CFTC, countered through his spokeswoman that he wants the CFTC to develop formal ethics guidelines to ensure that employees who oversee cryptocurrency regulations or investigations aren’t investing in cryptocurrencies as well.
“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,” said CFTC spokeswoman Erica Richardson.
Exactly how many employees at the CFTC are actively and currently trading in cryptocurrencies was not revealed in the memo or any official statements.