Mt. Gox shutdown shakes up newer Bitcoin derivatives market
The closing of the Bitcoin exchange platform Mt. Gox has not only highlighted the risks latent in the digital currency but has also shaken up the world of Bitcoin derivatives, an even newer market that watchdogs are just beginning to get on their radar, Bloomberg reported.
On George Samman's BTC.sx website, trading went up to over $35 million by January 21. However, it had to temporarily halt trading after Tokyo-based Mt. Gox closed since it needed to look for an exchange partner for its clients. BTC.sx is a platform that allows traders to bet on the price fluctuations of the digital currency which the former Wall Street investment adviser helped set up in May.
Before Mt. Gox closed, Samman told Bloomberg, "It is semi-Wild West, but that's only because it's new."
In many countries, the supervision of the digital currency continues to remain unresolved. Yet even while authorities and investors are still trying to come to terms with the different uses of the Bitcoin, they are now met with more complications as the derivatives market of the currency appears, the report said.
States in the US are still trying to deal with the issue of regulating Bitcoin as a platform for transmitting money. Russia has taken a firmer stance, saying that under its current laws, Bitcoin is not legal. China, meanwhile, has barred financial institutions from having to do with the cryptocurrency although trading goes on, the report said.
Two sources told Bloomberg that the US Commodity Futures Trading Commission is thinking if and how it can manage Bitcoin derivatives. The people added that the top derivatives regulator in the US is working on an internal memo that evaluates its authority on Bitcoin and other digital currencies, and looking at how it could possibly exercise the power it wields to supervise the markets, the report said.