US Derivatives Watchdog Calls for Tighter Oversight of Cryptocurrency and Political Betting

The US derivatives watchdog has raised an alarm about the lack of crypto regulations and political betting. According to a report by Financial Times, the leading US watchdog on derivatives has recommended for greater regulation of political betting markets and cautioned against a regulatory “gap” for cryptocurrency.

The report highlights that the lack of adequate regulation for digital assets, such as bitcoin and other cryptocurrencies.

FT Highlights Gap in Digital Asset Regulation

The Financial Times, via the interview of Rostin Behnam, the ex-chair of the Commodity Futures Trading Commission, says that a large sector of the US crypto market at present is unregulated.

The issue is even big considering that the adoption of crypto is only rising in the states, making the sector prone to frauds and misconduct.

Behnam oversaw the CFTC for four years, during which time it strengthened its oversight of cryptocurrency and so-called event contracts, such as those that permit election wagers, and finalized the first federal guidelines for carbon offsets. He was in charge of the watchdog’s 2023 case against cryptocurrency exchange Binance, which resulted in a $4.3 billion agreement with US regulators.

However, Behnam told the FT that he was worried about the lack of adequate regulation for digital assets, such as bitcoin and other cryptocurrencies.

Why is Political Betting A Problem?

Political betting has been a hot topic of discussion for a long time now. Election-related wagers have increased as a result of recent court decisions that have challenged the Commodities and Futures Trading Commission’s (CFTC) long-standing restriction on issuing or trading futures contracts based on election results.

Even the 2024 US presidential elections saw huge bets being made on marketplaces like Polymarket. However, the problem resided in the fact that such bets, when clubbed with gambling have a huge potential of influencing a large masses of population. It also makes people more vulnerable to losses.

Also Read: France Set To Ban Polymarket After Citizens Make Big Bets On Trump’s Win

Crypto Regulation Gap Remains A Global Problem

Global markets have seen the repercussions of a lack of crypto regulations, with the rise in scams, thefts, and frauds. One event that shook the global crypto market was the fall of FTX.

In a recent report, IMF mentions that the losses from the FTX collapse capped off a dangerous time for cryptocurrency, which has seen its market value plummet by trillions of dollars.

Strengthening financial regulation and oversight, as well as creating international norms that national regulatory bodies may apply uniformly, can allay many of these worries.

Additionally, IMF report mentions that Stablecoins and other cryptocurrency assets are not yet threats to the global financial system, although they have a significant impact on certain underdeveloped and emerging markets.

Large retail cryptocurrency holdings and currency substitution through crypto assets, mostly stablecoins denominated in dollars, are occurring in some of these nations.

Many of the emerging markets are witnessing cryptoization, which is the process of using these assets to replace native money and assets while getting over limits on capital controls and exchange.

Read Also: Bitwise CEO Thinks Trump Administration Can ‘Unfreeze M&A’ Deals & Boost Crypto Industry