Regulated Derivatives Will 'Legitimize' Crypto, Says CFTC Chair

The chairman of the Commodities and Futures Trading Commission believes regulated derivatives will instill market confidence in cryptocurrencies.

Chair Heath Tarbert told Cheddar Monday his agency is helping create a regulated futures market investors would be able to "Rely on" for better "Price discovery, hedging and risk management."

"By allowing to come into the world of the CFTC," investors can better access trusted and regulated financial products, improving overall confidence in the asset class, according to Tarbert.

The marketplace for cryptocurrencies derivatives is expanding.

Although still dominated by unregulated exchanges, it is gradually facing greater competition from regulated alternatives.

Bakkt launched physically delivered bitcoin futures last September and CME, which first launched bitcoin futures in December 2017, opened trading for options contracts Monday.

In the interview, Tarbert reiterated that his perspective will only extend to cryptocurrencies the CFTC currently classifies as commodities.

In an op-ed published on the CFTC website November, Tarbert argued regulators should adopt a greater "Principles-based approach" to the asset class.

The CFTC first defined bitcoin as a commodity in 2015, confirming the classification when it gave the go-ahead to CME and Cboe to launch regulated futures at the close of 2017.

When asked by Cheddar whether any other cryptocurrencies, such as XRP, could soon be defined as commodities, Tarbert told investors "To watch this space" as the CFTC works closely with the SEC to "Really think about which [crypto] falls in what box."