Commodity Futures Trading Commission (CFTC)

Overview of the Commodity Futures Trading Commission (CFTC)

The Commodity Futures Trading Commission (CFTC) is an independent federal regulatory agency responsible for overseeing and regulating the derivatives market in the United States. This market encompasses futures, swaps, and specific types of options. The main objective of the CFTC is to prevent fraudulent activities and ensure the integrity and resilience of these markets.

The CFTC was established in 1974 through the enactment of the Commodity Futures Trading Commissions Act. Initially, its focus was primarily on futures trading in the agricultural sector. However, as the financial industry evolved, the Commission expanded its jurisdiction to include foreign currencies, national and international government securities, and stock indices. This diversification and modernization were necessary to adapt to the changing landscape.

In 2000, the Commodities Futures Modernization Act further expanded the CFTC’s mandate. It required the Commission to collaborate with the Securities and Exchange Commission (SEC) to develop a joint regulatory regime for single-stock futures. Additionally, after the 2008 financial crisis and the subsequent enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010, the CFTC assumed a more significant role in regulating the dollar swaps market.

In 2014, the CFTC gained attention for its consideration of regulating Bitcoin. Ultimately, the Commission classified Bitcoin as a commodity under the Commodity Exchange Act (CEA). Former CFTC Chairman Heath Tarbert also declared Ether, the native token of the Ethereum blockchain, as a commodity in 2019. The CFTC recognizes the risks associated with cryptocurrency trading, particularly due to market volatility. As a result, the Commission has intensified its efforts to combat fraud and misappropriation in the digital currency market.