US CFTC seeks to better understand Ethereum Blockchain

Photo: Diego M. Radzinschi/NLJ

The U.S. Commodity Futures Trading Commission (CFTC) is seeking to better understand the technology, mechanics, and markets for cryptocurrencies, with a particular focus on ether and its use on the Ethereum Network.

On these lines, the CFTC has published a Request for Information (RFI) in order to gather public feedback on a range of questions related to the underlying technology, opportunities, risks, mechanics, use cases, and markets, related to Ether and the Ethereum Network.

The document states:

“The input from this request will advance the CFTC’s mission of ensuring the integrity of the derivatives markets as well as monitoring and reducing systemic risk by enhancing legal certainty in the markets.

“The RFI seeks to understand similarities and distinctions between certain virtual currencies, including here Ether and Bitcoin, as well as Ether-specific opportunities, challenges, and risks. The Commission welcomes all public comments on these and related issues.”

The Commission has put up a total of 25 questions which include topics such as the impetus for developing Ether and the Ethereum Network, especially relative to Bitcoin; the use of the Ethereum network by the developer community; scalability challenges, if any, of the Ethereum network; proof of work and proof of stake; similarities and differences in the governance of Ethereum and bitcoin networks; introduction of derivative contracts on Ether; and security issues, among others.

The comments must be sent within 60 days of publication of the RFI in the Federal Register.

The CFTC said that it expects the comments and information received to benefit LabCFTC, an initiative launched last year to promote responsible fintech innovation, and improve its understanding of these emerging technologies.

Last month, the CFTC’s LabCFTC released “A CFTC Primer on Smart Contracts,” which aims to help explain smart contract technology and related risks and challenges. In October 2017, LabCFTC released a primer on virtual currencies.