The digital currency markets are no longer limited to liquid transactions whereby traders take positions that they may later liquidate in order to receive fiat. Derivatives such as Bitcoin futures at the Chicago Mercantile Exchange are now a major aspect of cryptocurrency trading, and these instruments fall under the purview of the Commodity Futures Trading Commission in the United States. According to Dan Berkovitz, a commissioner in the CFTC, the agency is currently in good shape with regard to regulating crypto futures and options, but it would need additional resources in order to exert oversight of major cryptocurrency exchanges.

The highly volatile nature of digital currency trading has come to the attention of American lawmakers, and many of them believe that the CFTC should get involved in these markets, but Mr. Berkovitz feels that Members of Congress should introduce bills and push for regulation that would give the agency what it needs to regulate major exchange platforms operating in the U.S.

Commissioner Berkovitz recently appeared before the Managed Funds Association Digital Assets Conference to speak about the current state of cryptocurrency trading regulation in the U.S., and he is concerned about the rise of decentralized finance technology, which he thinks should be subject to CFTC registration and oversight.

Regulation in Europe

In many cases, the European Union is seen as the leader when it comes to cryptocurrency regulation. The bloc is known for being highly supportive of the industry, and it has enacted some of the most robust and comprehensive regulations in the world when it comes to overseeing cryptocurrency exchanges.

The EU has also taken a proactive approach to cryptocurrency regulation by developing its own crypto regulation rules. According to a report published by the European Securities and Markets Authority, the body has taken steps to create a centralized index for cryptocurrencies, and it plans to oversee all virtual currency platforms through the EU’s Markets in Financial Instruments Regulation.

Meanwhile, EU finance and finance ministries are taking steps to make sure that cryptocurrency is only used to pay for things that aren’t considered products of basic needs such as housing and food. Spain is also considering new laws to ensure that cryptocurrency is only used for trading between individuals.