Tag: COMMODITY FUTURES TRADING COMMISSION

Bitcoin Futures ETF Exceeds Expectations, Trades $1 Billion On Day One

by NEWSBTC

The numbers are in, and the Bitcoin Futures ETF had the biggest debut of the year. By far. We have to “exclude ETFs where their Day One volume was literally one pre-planned giant investor or BYOA,” but that’s fair. Apparently, the ProShares Bitcoin Strategy ETF got to the top naturally, via real trades by real people and institutions. Considering that just its approval by the SEC seemed to catapult Bitcoin’s price to the edge of an All-Time High, a question arises. How will the market react tomorrow? And the day after that?

Related Reading | Bitcoin ETF Check, What’s Next For BTC

But let’s avoid speculation and check Senior ETF Analyst for Bloomberg, Eric Balchunas’ charts:

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Considering the first-ever Bitcoin Futures ETF “also traded more than 99.5% of all ETFs,” it’s fair to say the launch was a huge success. What does it mean for the following ETFs? According to Balchunas, it’ll be hard for them to succeed. “Every day counts because once an ETF gets knows as ‘the one’ and has tons of liquidity, it’s virtually imposs to steal.” And, what does this mean for the market in general? NewsBTC already covered this question:

“Although these ETFs have attracted criticism for being backed by futures contracts and not the underlying asset, they could still have big implications for Bitcoin — allowing tax-sheltered and retirement accounts to easily get exposure, and potentially opening the cryptoasset to a much broader audience.”

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Why Is There A Bitcoin Futures ETF Instead Of A Bitcoin ETF?

Who better to answer this question than the SEC’s chairman himself, Gary Gensler told CNBC: 

“What you have here is a product that’s been overseen for four years by the U.S. federal regulator CFTC, and that’s being wrapped inside of something within our jurisdiction called the Investment Company Act of 1940, so we have some ability to bring it inside of investor protection.” 

So, the Bitcoin Futures ETF falls under the Commodity Futures Trading Commission jurisdiction. Plus, it tracks the Chicago Mercantile Exchange (CME) Bitcoin futures. And the SEC considers that the institutional support will protect the customer. According to them, the underlying asset, Bitcoin, is too volatile and subject to manipulation.

The first persons to propose a Bitcoin ETF in the USA, the Winklevoss twins, lament that when they did the price of Bitcoin was $68 and nowadays is $64K. “That’s almost a 1000x return in the meantime. I’m glad we got here, but it has taken too long.”

Also a skeptic of the Bitcoin Futures ETF‘s long term potential, Anthony Bertolino, VP of growth at iTrustCapital, told CNBC:

“The launch of the first bitcoin-linked ETF in the U.S. will bolster the broader crypto market and help an entirely new investor class experience the benefits of bitcoin as a legitimate asset. However, a derivatives-based bitcoin ETF is not where we want to be long-term.”

BTCUSD price chart for 10/20/2021 - TradingView

BTCUSD price chart for 10/20/2021 - TradingView


BTC price chart for 10/20/2021 on Forexcom | Source: BTC/USD on TradingView.com

What Are The ProShares Bitcoin Strategy ETF’s Characteristics?

The next few days will be crucial for this story. There’s a possibility that today’s demand was orchestrated, at least in part. If this happened, it’ll be very obvious in the following days. In any case, the fund’s official site defines the first Bitcoin Futures ETF as:

“ProShares Bitcoin Strategy ETF (BITO) is the first U.S. bitcoin-linked ETF offering investors an opportunity to gain exposure to bitcoin returns in a convenient, liquid and transparent way. The Fund seeks to provide capital appreciation primarily through managed exposure to bitcoin futures contracts.”

Related Reading | Grayscale Investments Set to File for Bitcoin Spot ETF as Competition Heats Up

And alerts the clients that “The fund does not invest directly in bitcoin,” and that “The price and performance of bitcoin futures should be expected to differ from the current “spot” price of bitcoin.” Forewarned is forearmed.

Featured Image: Screenshot of the ETF's opening bell ceremony| Charts by TradingView

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Did US Regulators Began Offensive Against Crypto Platforms? CFTC Fines Kraken

by NEWSBTC

One of the biggest cryptocurrency exchanges, Kraken, received a $1.25M fine. The Commodity Futures Trading Commission imposed the “civil monetary penalty” plus a cease and desist from “further violations of the Commodity Exchange Act (CEA)” on September the 28th. According to the CFTC, Kraken provided margin for commodity transactions to retail clients in the U.S. who were not suitable to use those products.

Related Reading | How the CFTC fine on Coinbase could affect future crypto company listing

The fine, however, seems like a slap on the wrist for a gargantuan company like Kraken. They’re a private company and their annual revenue is not on the public domain, but they raised $100M at a $4B valuation in 2019. And, reportedly, Kraken was seeking a $20B valuation this year following an IPO that didn’t happen. For a company that size, a $1.25M fine is not much, but maybe the punishment just fits the violation.

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ETHUSD price chart for 09/29/2021 - TradingView

ETHUSD price chart for 09/29/2021 - TradingView


ETH price chart on Kraken | Source: ETH/USD on TradingView.com

What Did Kraken Do Exactly?

The violation occurred between June 2020 and July 2021 approximately. During that period, “Kraken illegally operated as an unregistered FCM.” And, what did the unregistered futures commission merchant offer? Well, U.S. customers could acquire digital assets using margin, and Kraken provided said asset or the fiat money “to pay the seller for the asset.” Of course,  users had to provide collateral and pay for the received asset within 28 days. 

If they didn’t pay in the established period, “Kraken could unilaterally force the margin position to be liquidated.” They could also liquidate “if the value of the collateral dipped below a certain threshold percentage of the total outstanding margin.” In short, Kraken was selling futures and extending credit without registering as an FCM.  “These transactions were unlawful because they were required to take place on a designated contract market and did not.”

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The CFTC’s Acting Director of Enforcement, Vincent McGonagle, said in the press release:

“This action is part of the CFTC’s broader effort to protect U.S. customers. Margined, leveraged or financed digital asset trading offered to retail U.S. customers must occur on properly registered and regulated exchanges in accordance with all applicable laws and regulations.”

The Cryptocurrency Exchange’s Latests Plays

Over the last few months, Kraken representatives went hard on the traditional financial system. From their Director Dan Held calling it “a cartel,” to CEO Jesse Powell predicting that cryptocurrency companies would replace them within a decade. In Held’s tweet, he attached a graphic that showed the consolidation of the US banking sector advanced through the years and now just four institutions control it all: 

Related Reading | Bitcoin Slides 5% From Recent Highs Amidst Binance CFTC Probe Revelation

For his part, the last day of March, Powell told Bloomberg:

“Most of these guys haven’t done the work these last ten years to make sure they are current with the crypto technology. So I think there’s a very real risk that over the next ten years, for those legacy businesses to be simply replaced.”

In more recent news, Kraken is trying to re-enter the European market. The company was licensed to operate through the UK’s Financial Conduct Authority. Thus, since Brexit happened, they have to find a new home for their license. When NewsBTC covered the news, we said:

“Powell added that the Kraken exchange seeks to re-enter Europe by the end of 202. It will go with the Republic of Ireland, Malta, and Luxembourg, among possible countries, to award such a license. However, they are yet to fix an official date as the talk still goes on.”

Will the $1.25M fine the CFTC imposed throw a wrench on those, or any plans? Certainly not. Not by a long shot. 

Featured Image by Erik Tanghe from Pixabay - Charts by TradingView

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U.S. Congress Tables Bill to Clarify Crypto Regulatory Framework

by Btcmanager

The US Congress is set to make clarifications to the existing digital asset regulation in the U.S. This development is expected to provide a legal framework for regulating and classification of assets like bitcoin in the United States. 

Working Group Set up to Evaluate Existing Digital Assets Regulation

The bill titled ‘’Eliminate Barriers to Innovation Act of 2021’’ was submitted on Tuesday by Reps Patrick McHenry and Stephen Lynch. The legislation seeks to create a working group composed of industry experts and representatives from financial regulatory agencies to evaluate digital assets’ existing legal and regulatory framework in the U.S. 

The bill also seeks to clarify the current regulatory concerns among the two major financial regulators, the Security and Exchange Commission and the Commodity Futures Trading Commission (CFTC). The unique nature of digital assets, particularly cryptocurrencies, has led to confusion on which regulator has jurisdiction over a token.

There are no clear regulations on when a certain cryptocurrency is a security or not. This is evident in the current legal struggle between the SEC and Ripple, where the regulator claims that its token XRP is security while Ripple claims otherwise. 


The bill submitted today mandates that Congress creates a working group within 90 days of its passage composed of SEC and CFTC representatives. Also, the group will consist of representatives from fintech companies, investor protection groups, financial service institutions, and academic researchers. 

The group will be required to file a report analyzing current regulations and their effect on primary and secondary markets in the U.S. It will also analyze how custodial services, private key management, and cybersecurity are currently viewed under the existing legislature. While providing steps to improve current fraud prevention and investor protection practices. 

Lastly, the report will also include recommendations on how to improve primary and secondary digital assets markets. This includes using parameters like fairness, transparency, efficiency, and integrity to evaluate financial markets’ improvements. 

Major Development to the U.S Digital Asset Framework

The bill has generated comments from the U.S financial sector. Amy Davine Kim, chief policy officer at the Chamber of Digital Commerce, revealed that the legislation is needed. “It brings together both the SEC and CFTC in a formal way, to work through some of the key issues that have impacted legal clarity in the space for years,” Kim said.

The bill was initially supposed to be introduced Monday but was pulled down due to procedural actions in the legislative arm. 


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CFTC Chairman Heath Tarbert Announces He Will Step Down Early Next Year

by Blockchain News

Heath P. Tarbert, the chairman of the US Commodity Futures Trading Commission (CFTC) has announced that he intends to reassign early next year. Although his term expires in 2024, Tarbert will step down from his leadership role as President-elect Joe Biden prepares to enter the White House on January 20.

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With the transition to Joe Biden administration being prepared, other key regulators including Bill Hinman, CFTC’s Director of Division of Corporation Finance, and Jay Clayton, Securities Exchange Commission chairman, have announced the departures.  

Tarbert’s exit means that Biden would have to appoint a new chairperson of the CFTC. Tarbert began serving as the chairman of the agency in July 2019. Based on his resignation announcement, he said that that it has been a great honor to serve the people of America as the 14th chairman of the CFTC and as one of the agency’s five commissioners. He is proud of the agency’s achievements in its pursuits to be the global standard for sound derivative regulation. 

During his tenure, Tarbert strengthened cryptocurrency regulations, promoted responsible fintech innovation, and declared Ether as a commodity. He worked with fellow CFTC commissioners to enabled vigorous protection of the integrity of the markets and set several enforcement records. They have successfully concluded negotiations with the UK and EU to develop stronger relationships with the agency’s regulatory counterparts overseas.

Tarbert mentioned that they have improved the agency’s diversity, with more people of color and women serving in senior leadership positions than ever before. Furthermore, they have achieved all that with the interest of everyday Americans in mind, including the nation’s ranchers and farmers who rely on derivatives to hedge their risk.

Tarbert further said that most of the agency’s work has occurred in the midst of the coronavirus pandemic which is testing the strength of its markets and its ability to adapt. Amid historic volatility, the CFTC has offered a watchful eye and steady hand while its markets act as shock absorbers.

He said that such accomplishments would have not been possible without the hard work of the CFTC’s dedicated career public servants and the executive leadership team of the agency. He expressed his gratitude to the US President and his administration for their confidence and the opportunity to serve.

Image source: Shutterstock

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