Commodity Futures Trading Commission Chair Heath Tarbert announced that he will resign early next year, after 17 months on the job.
In listing his seven top accomplishments, he included having “promoted responsible fintech innovation and declared Ether a commodity.”
Tarbert replaced J. Christopher Giancarlo at the head of the CFTC. That was a hard act to follow, as Giancarlo won the moniker “Crypto Dad” after telling a Senate committee “virtual currencies mark a paradigm shift in how we think about payments, traditional financial processes, and engaging in economic activity.” He also declared bitcoin a commodity rather than a security.
Tarbert followed up on that legacy on Oct. 19, 2019. Speaking at Yahoo Finance’s All Markets Summit in New York, he said, “[w]e’ve been very clear on bitcoin: bitcoin is a commodity. We haven’t said anything about ether—until now. It is my view as chairman of the CFTC that ether is a commodity.”
Tarbert reiterated that stance in January 2020, saying in an interview that by embracing bitcoin and ether, “we’re allowing futures markets to develop based on these products.”
As a result, he added, bitcoin and ether buyers “can rely on the futures markets, which have been around for over 100 years and which have price discovery, hedging and risk management. In many ways, it’s adding legitimacy to this market.”
By regulating cryptocurrencies, Tarbert said, “we’re actually creating a market for digital assets.”
When asked about other cryptocurrencies—and XRP in particular—he did not offer an opinion but said “stay tuned.”
Tarbert said that the CFTC had been working closely with the SEC “to really think about which falls in what box.” He added:
“If I hear anything from market participants it’s that we really need clarity. That without clarity it’s really difficult to figure out how these [digital assets] will eventually be regulated and how to trade them.”
However, neither the CFTC nor the SEC made any comment in June, when the retired Giancarlo said he believed XRP was also a commodity, rather than a security subject to the SEC’s much more stringent controls.
Tough on fraud
In a May column for the Harvard Business review, Tarbert said the agency felt “principles-based regulation is generally appropriate is with respect to developments in financial technology (fintech), including blockchain and digital assets.”
This means allowing a period of development and observation before making regulations. He said:
“It is my view that the United States must lead the world in this technology, and applying overly prescriptive rules could stunt the development of this important market.”
Which didn’t mean being soft on bad actors. In July, the agency’s 2020-2024 strategic plan promised it would be “tough on those who break the rules.”
Addressing the broader commodities market, the plan said the agency planned to increase surveillance on products and markets where fraud and manipulation are more common, as well as increasing collaboration with U.S. and international regulators, and developing “bright-line rules” to prevent market manipulation.