Commodity Futures Trading Commission (CFTC) Chairman Heath Tarbert believes the crypto world will see ethereum futures contracts sometime in 2020.
Speaking at Georgetown University in a fireside chat during the first day of DC Fintech Week, Tarbert told moderator Chris Brummer that he "absolutely" believes ether futures could trade in the next six to 12 months.
"I'd say it is likely that you would see a futures contract in the next six months to a year," he told Brummer, though he cautioned that simply launching a futures contract isn't the be-all and end-all. He went on to add:
Tarbert first declared ether a commodity earlier this month, announcing that his agency would be willing to approve futures contracts on the world's second-largest cryptocurrency by market capitalization.
However, it remains unclear who might actually be interested in offering ether futures contracts to the U.S. market. Speaking to reporters after his appearance on stage, Tarbert noted that, at least to his knowledge, no company has applied to launch such a product.
"None that I know of," he said in response to a question about who has applied. "My guess is that it will come soon but I don't know where they're coming from."
Spokespeople for Cboe and the Intercontinental Exchange – which offer or offered bitcoin futures contracts – did not immediately return requests for comment. A CME spokesperson told CoinDesk in a statement that the company "has no plans to introduce additional cryptocurrency futures."
"Right now, we are focused on bringing options on CME bitcoin futures to market in Q1 2020 and continuing to grow our CME CF Reference Rates and Real-Time Indices," the spokesperson said.
On the CFTC's side, approving an ether futures product will depend on the application itself, Tarbert said. Companies looking to list these contracts can apply to self-certify or can have the CFTC go through the product and approve it. The process would be similar to approving bitcoin futures contracts.
Exchanges "could start it on their own or they could come to us with an application and ask us to grant it to be able to [offer the product]," he told a press gaggle, adding:
At present, there are about four dedicated crypto exchanges looking into derivatives products (Tarbert didn't name them, but they are likely Seed CX, ErisX, Tassat (formerly trueDigital) and LedgerX), as well as the larger, more established firms that offer bitcoin futures, the CFTC Chairman said.
During the fireside discussion, Tarbert added that buyers and sellers would hopefully be reassured that using a CFTC-regulated exchange indicates that there is no market manipulation.
"What our markets do, and [have been] doing for 150 years is ensure there's sufficient price transparency," he said. "You know that there's the buyers and the sellers and that price actually represents real aggregate demand."
The CFTC may soon acknowledge other cryptocurrencies as commodities, Tarbert said during his fireside chat.
"There will be other derivatives coming soon to a market near you for crypto assets," he said, though "coming soon" is relative, given that there are "a couple thousand" cryptocurrencies to assess. He added:
There may be a demand for other futures contracts. In the U.K., Kraken Futures (formerly known as Crypto Facilities) offers residents access to bitcoin cash, litecoin and XRP futures contracts, all of which have grown in popularity after the U.S.-based Kraken acquired the company.
Part of the process is working with the U.S. Securities and Exchange Commission (SEC), Tarbert said, noting that under current federal law, any instrument that is not a security is "most likely" a commodity (though exceptions apply: Congress has specified that movie tickets, for example, are not commodities).
"What we're seeing is that if the [SEC] has undertaken its analysis and comes to the conclusion that the particular crypto asset doesn't meet the old Howey Test as to whether it's an investment contract and therefore a security, in most cases it's going to fall in [the commodities bucket]," he said.
Tarbert also said that an asset can evolve from a security to a commodity and vice versa, though there may not be a precedent for this.
In response to a question from Castle Island Ventures' Nic Carter about whether this sort of transmutation has occurred before, Tarbert said:
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