CFTC’s New Direction on Cryptocurrency Regulation
Caroline Pham, a member of the Commodity Futures Trading Commission (CFTC), has suggested the regulatory body overseeing derivatives markets in the United States should initiate a controlled pilot program for cryptocurrency regulation.
In a pre-recorded statement during a Cato Institute event on September 7th, Pham expressed her intention to propose a pilot initiative for digital asset markets after engaging in public roundtable discussions. She believes the United States may need to swiftly adopt measures to align with cryptocurrency-friendly jurisdictions, drawing a parallel with regulatory sandboxes implemented at the state level.
“A pilot program can create a framework for emerging technologies and market structures under our existing laws and regulations,” stated Pham. “It is my hope that a pilot to test, gather data, and develop a pragmatic approach to tokenization can ensure we continue to uphold our mandate to fostering open, transparent, competitive, and financially sound markets.”
.@CarolineDPham calls on @CFTC to launch a pilot program for digital asset markets.
Watch: https://t.co/lEAPm9CQLS #CatoEcon pic.twitter.com/ohpeAmcas2
— Cato CMFA (@CatoCMFA) September 7, 2023
Pham’s statements indicated that the current state of the cryptocurrency market resembles an unregulated frontier. She emphasized the importance of engaging in a conversation with the industry, although she didn’t provide clear guidance on the extent of influence crypto companies should have.
While advocating for greater regulation in the crypto sector, Pham drew on her extensive experience as a sponsor of the CFTC’s Global Markets Advisory Committee. She recounted her interactions with regulators, finance ministries, and central banks during an international tour. According to Pham, policymakers in other countries display a strong consensus on the necessity of fostering responsible economic growth. She contrasted this proactive stance with what she perceives as a more complacent approach in the United States, especially within the blockchain and digital assets arena.
Consequently, Commissioner Pham’s efforts to encourage crypto innovation may be put on hold within the CFTC while the industry awaits the establishment of regulatory laws by Congress for the U.S. cryptocurrency sector.
“Staying ahead of the curve requires being ready to look to the future and preparing to embrace change,” Pham stated.
Most of the cryptocurrency-related bills in Congress propose a significant role for the CFTC in overseeing digital asset spot markets. However, it remains uncertain whether any of these bills will be passed into law this year or the next. Many Democratic lawmakers have expressed skepticism about the industry and align with SEC Chair Gary Gensler’s perspective that crypto businesses should be subject to existing securities regulations.
