Trump’s administration deliberately collapsed the cryptocurrency market when it peaked at the end of 2017.
The former CFTC head Christopher Giancarlo told CoinDesk that leaders at CFTC, the Ministry of Finance, the SEC and the National Economic Council have concluded that Bitcoin futures launch would help to burst the cryptocurrency bubble. “And that worked,” he says.
Giancarlo clarified that the sharp rise in Bitcoin price in December 2017 marked the formation of the first major bubble since the 2008 crisis. That is why the presidential administration worked together to solve this problem.
CFTC approved Chicago Mercantile Exchange (CME) and Chicago Options Exchange (CBOE) Futures on December 1, 2017. On December 18, Bitcoin futures started trading. The day before, December 17, 2017, the Bitcoin exchange rate reached its historic maximum and then plummeted in just a few weeks.
We saw a bubble building and we thought the best way to address it was to allow the market to interact with it, Giancarlo says.
He notes that with the launch of futures, it became possible to open short positions.
CFTC staff acted strictly within the procedural framework, Giancarlo emphasizes. However, he admitted that he had consulted with Treasury Secretary [Steven] Mnuchin and NEC Director Gary Cohn. Together, they decided that if Bitcoin futures were launched, institutional investors would put things in order in the market.
Giancarlo believes that the cryptocurrency bubble cannot be seen in isolation from the 2008 financial crisis. Regulators did nothing with the bubble of mortgage lending, although they had the opportunity to burst it – this served as a lesson for Giancarlo.
Recall that in mid-September, Giancarlo joined the advisory board of the Digital Trade Chamber, which promotes cryptocurrencies in the United States and Canada. Giancarlo worked at CFTC for more than five years: he joined the Commission in June 2014, and in August 2017 became its chairman.
Last week, the Wall Streer Journal published an article in which Giancarlo argues that the US should place a dollar on the blockchain. Giancarlo believes that the US national currency may lose its leading position due to the desire of other states to issue the central bank’s digital currency (CBDC).
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