- Full Text
- Trade Journal
Waking up and cracking down
Trade Journal
Full text preview
Regulators are getting wise to cryptocurrencies Regulators are getting wise to cryptocurrencies The market capitalisation of bitcoin, arguably the world's most well-known digital currency, reached over $300 billion at the end of 2017 after years of hovering around the $1billion mark. But in the same way the value of bitcoin has grown significantly, so has financial regulators' interest in addressing the unprecedented growth of, and investment in, this new market. Cryptocurrencies are still a small segment relative to the global financial market but they are growing very fast. “Volumes are still small on a relative basis: we are seeing between 7,000 and 8,000 futures contracts a day for some cryptocurrencies, a bit less for bitcoin,” says Cboe’s managing director, business development, Michael Mollet, speaking about progress since they launched in December. “But for a new product to trade that kind of volume right out of the gate is great.” Trading in bitcoin and other digital currencies has been hitting critical levels in recent weeks and this has had one key consequence: both volume and volatility have put them firmly on the radar of politicians and regulators. Cryptocurrencies and government oversight have historically been at odds with each other. Bitcoin, which is believed to have been created in 2009, was launched on the idea that people don't need banks as intermediaries, and can instead rely on the blockchain to record transactions in digital money. The entire premise of blockchain is that it's a decentralised way of keeping track of digital assets, and one that doesn't rely on sharing individual user details. The idea was most effective when bitcoin was primarily used by people who were very knowledgeable about computer security. But as the investor base has grown hugely in the past few years – with less sophisticated retail investors turning their interest to bitcoin mining,...