Why the CFTC's Questions About Ethereum Matter

Last week, the US Commodity Futures Trading Commission released a series of questions for the public, focusing on the workings of ethereum and the market for its token, ether.

In July, Cboe Global Markets said it was contemplating listing ether futures but was waiting for CFTC guidance, which implies that it has had discussions with the derivatives regulator.

What is a surprise is the new approach the CFTC seems to be taking - and what it could mean for cryptocurrency development going forward.

Before delving into the CFTC's changing role, let's look at how likely ether futures are in the short term.

On the one hand, listed ether derivatives would give the CFTC insight into the underlying markets and enable it to more efficiently monitor the network and pursue possible cases of manipulation and fraud.

While an ether futures contract on a regulated exchange would give the CFTC more influence in ensuring market integrity, there are strong fundamental reasons against it.

If the CFTC decides that it definitely does not want ether derivatives trading on any of the platforms under its oversight, can it stop it? The Commodity Futures Modernization Act of 2000 introduced the concept of self-certification, in which exchanges can start trading a new contract the day after presenting the CFTC with the necessary commitments that the contract does not violate any rules.

While it is difficult to imagine an exchange presenting such documentation knowing that the CFTC disapproves, the agency has stressed that if a contract complies with established regulation, it can't really say no.

Rather than allow the bitcoin futures listing process to mirror the relatively straightforward self-certification enjoyed by more traditional contracts, the CFTC was in conversations with the relevant exchanges for months before they launched and was instrumental in changes to margin and information-sharing requirements.

It is unusual for the CFTC to ask for public input into an underlying asset - this could signal the beginning of a new era of public/private collaboration.