Regulators Uncertain About Virtual Currency Market Oversight

September 25, 2017

As exchange-traded funds (“ETFs”), other kinds of exchange-traded products, and bitcoin-related items grow in popularity, regulators are still uncertain about how to oversee the virtual currency market.

The topic became a point of discussion on September 8 at the Securities and Exchange Commission-New York University Dialogue on Securities Market Regulation in Washington, D.C. During the discussion, Kathleen Moriarty of international law firm Arnold & Porter Kaye Scholer LLP said that the SEC has held off on its oversight because the virtual currency markets are still in their early stages and are not policed well. Moriarity remarked that from her viewpoint, the SEC is waiting until the markets are more developed before ramping up its oversight efforts.

In agreement with Moriarity was Ananth Madhavan of BlackRock Inc. The company’s head of global research for ETFs and index investing suggested that regulators must first decide how to manage the virtual currency market due to differences between traditional assets and cryptocurrencies. One example he offered was the price volatility of the Standard & Poor’s 500 being under 20 percent, while the bitcoin returns are more than 100 percent.

With virtual currency continuing to receive high interest, it is expected that bitcoin ETFs will occur. Laura Morrison of Bats supports establishing a regulatory body to promote market growth. Morrison noted the amount of calls she gets each week asking to explore the market, saying that it is interesting to investigate and explore.