The chairman of the Commodities and Futures Trading Commission (CFTC) believes regulated derivatives will instill market confidence in cryptocurrencies.

Chair Heath Tarbert told Cheddar Monday his agency is helping create a regulated futures market investors would be able to “rely on” for better “price discovery, hedging and risk management.”

“By allowing [cryptocurrencies] to come into the world of the CFTC,” investors can better access trusted and regulated financial products, improving overall confidence in the asset class, according to Tarbert. “It’s helping to legitimize [digital assets], in my view, and add liquidity to these markets.”

The marketplace for cryptocurrencies derivatives is expanding. Although still dominated by unregulated exchanges, it is gradually facing greater competition from regulated alternatives. Bakkt launched physically delivered bitcoin futures last September and CME, which first launched bitcoin futures in December 2017, opened trading for options contracts Monday.

In the interview, Tarbert reiterated that his perspective will only extend to cryptocurrencies the CFTC currently classifies as commodities. Appointed chairman last April, he has advocated for an open regulatory regime when it comes to cryptocurrencies.

In an op-ed published on the CFTC website November, Tarbert argued regulators should adopt a greater “principles-based approach” to the asset class. “The trick with digital assets is to foster the development of exciting new products while mitigating potential risks,” he wrote.

Rather than the regulator issuing prescriptive rules that companies need to follow, companies should develop commercially viable solutions that satisfy regulatory standards, he said.

The CFTC first defined bitcoin as a commodity in 2015, confirming the classification when it gave the go-ahead to CME and Cboe to launch regulated futures at the close of 2017. Ether was only confirmed as a commodity last October when Tarbert said that, as it hadn’t been treated as a security by the Securities and Exchange Commission (SEC), “it stands to reason” that it is most likely a commodity.

When asked by Cheddar whether any other cryptocurrencies, such as XRP, could soon be defined as commodities, Tarbert told investors “to watch this space” as the CFTC works closely with the SEC to “really think about which [crypto] falls in what box.”