Former U.S. Trading Commissioner Bart Chilton has long been critical of the fact that regulators have largely allowed the cryptocurrency markets to operate without oversight.
Last year, Chilton — who ran the Commodity Futures Trading Commission (CFTC) from 2007 to 2014 — called for President Obama to personally instruct the CFTC to establish basic consumer protection legislation, and he has repeatedly warned bitcoin devotees that lack of regulation is a “blind spot” for the industry and could prove to be its undoing.
However, recent developments have made him optimistic that the cryptocurrency markets are maturing and could turn a corner into the mainstream.
“I do think it’s sustainable,” Chilton said of bitcoin during an interview with Fox Business Network’s Maria Bartiromo, declaring that JPMorgan Chase chief executive Jamie Dimon is wrong to call it a “fraud”.
“I don’t know if it’s sustainable at these prices,” he continued, noting that the bitcoin price had experienced a flash crash of almost $1,000 earlier this week. Bitcoin’s volatility has been a sticking point for Chilton in the past, and he has stated that if he still chaired the CFTC he would investigate what he believes is naked market manipulation on bitcoin exchanges.
However, he says that derivatives exchange operator CME Group’s announcement that it will list bitcoin futures contracts could be a tipping point in this regard. Flash crashes won’t “happen to that extent on the futures, because they will have…circuit breakers” that limit the degree to which contract prices can fluctuate on a given day, he explains.
Of course, many bitcoin advocates fear that regulations will stifle innovation. New York’s so-called “BitLicense,” for instance, famously led to an exodus of bitcoin services from the state.
Nevertheless, Chilton maintains that basic consumer protections such as limiting price volatility and reducing counterparty risk are critical to the nascent technology’s continued growth.
“They don’t have to be crazy, overly-zealous regulations,” he concluded. “I think the bitcoin enthusiasts are starting to get this, but it’s been a while,”