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CFTC to explore cryptocurrency risks

J. Christopher Giancarlo, CFTC chairman, warned of the risks associated with cryptocurrencies and announced that the agency would hold two meetings to review derivatives of virtual currencies.

"Undoubtedly, virtual currency and virtual currency derivatives present both significant opportunities and challenges," Mr. Giancarlo said in a news release Thursday. He cited cryptocurrency risks such as unregulated and unsupervised trading platforms, hackable trading platforms and virtual currency wallets, extremely volatile price moves, and investor fraud and market manipulation.

The Commodity Futures Trading Commission in 2016 designated cryptocurrencies like bitcoin as commodities under its regulatory oversight.

"The responsible regulatory response to virtual currencies is consumer education; asserting CFTC authority; surveilling trading in derivative and spot markets; prosecuting fraud, abuse, manipulation and false solicitation; and active coordination with fellow regulators," Mr. Giancarlo said. "The CFTC has been following this course of action and will continue to do so."

The CFTC's technology advisory committee on Jan. 23 will consider challenges, opportunities and market developments of virtual currencies, and the agency's market risk advisory committee will meet on Jan. 31 to consider the process of self-certification of new products and operational rules.