One of the biggest reasons for the rejection of Bitcoin ETFs given by the US Securities and Exchanges Commission (SEC) is that Bitcoin ETFs are subjected to price manipulation. However, Brian Quintenz, the Commissioner at the Commodities and Futures Exchanges Commission (CFTC) begs to differ.
At the recently held event for the Bipartisan Policy Center, the CFTC head talked about various issues regarding the current economic situation with SEC commissioner Hester Peirce.
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In that talk, Quintenz said:
“Our jurisdiction over those [bitcoin futures] contracts requires that they not be readily susceptible to manipulation There are mathematical ways through a settlement index to design a contract where even if there isn’t a lot of liquidity on one exchange referenced, the index itself is not readily susceptible to manipulation. For instance, in one of the bitcoin futures contracts, they settle it to multiple volumes weighted average prices in five minutes increments over the course of an hour across multiple exchanges. So if one participant wanted to manipulate that settlement index, they would have to have the majority of volume on multiple exchanges in multiple five minute periods. Could they do it? Maybe. Would we know about it? Immediately.”
Brian D. Quintenz was nominated by President Trump to serve as a Commissioner of the U.S. Commodity Futures Trading Commission on May 12, 2017.
Prior to his appointment to the CFTC, Mr. Quintenz founded and served as the Managing Principal and Chief Investment Officer of Saeculum Capital Management, a registered Commodity Pool Operator that specialized in risk management and technical analysis investment strategies.
Price, who holds the opposite views to Quintenz replied by saying:
“At the SEC we have been unwilling to sign off on a bitcoin ETF thus far. My concern is that it looks a bit like a merit-based approach, judging the underlying bitcoin market and saying we don’t think these are regulated enough. You know, there are lots of markets that aren’t regulated, but we nevertheless build products on top of them. So I think we have to be very careful with that kind of reasoning.”
Notably, to streamline the process of application, Quintenz has proposed a self-certification method where they don’t have to establish a new offering, but they have to be adequately equipped to not disapprove it. One of those requirements is to establish that the offering is not prone to price manipulation.
It is obvious that momentum is swinging towards a bitcoin ETF The statements by the CFTC commissioner should add more pressure on the SEC to do so.