In a CNBC interview, Andrew Busch, the Chief Marketing Intelligence Officer for the United States’ Commodities Future Trading Commission, said that integrating bitcoin into traditional exchanges will come with its own unique challenges.
One of these challenges will be keeping potential futures manipulation in check. It’ll be up to regulators to remain diligent to avoid such malicious market tactics, Busch believes:
What we’re trying to do is show people that the exchanges [are] the ones looking at the underlying cash contract to make sure it’s not manipulated. Our role as a derivatives regulator is to make sure the futures contract is not manipulated.”
A Different Animal
For all intents and purposes, many people understand bitcoin like a stock that operates in its own stock-like market. Fundamentally, the comparisons make sense when we consider both are investment instruments, both have a market cap calculated from supply and price, and both have a value driven by supply and demand.
In reality, though, bitcoin and cryptocurrencies are another beast entirely. They’re more volatile than stocks, they change hands differently, and their market is, at this point, completely unregulated and based on the internet.
In the interview, Busch especially keyed in on this last point, noting,
This is really important for people to understand looking at bitcoin: the underlying cash market is not regulated at this point.”
Busch believes it’s important for potential and new investors to understand this “when they’re trying to make a decision on what to do with [bitcoin].”
Two of the world’s largest stock exchanges, the CME and Cboe, have plans to list bitcoin futures by December 18th, and NASDAQ may not be far behind.
With these listings, we’re entering a new era of adoption for bitcoin, one that will lead to institutional attention and traditional investment practices. It’ll be up to regulators like Busch to assure that its integration into formal markets runs smoothly.
