The cryptocurrency sector is expanding at an unprecedented rate, and top executives in financial institutions and regulatory agencies are starting to recognize its growing role in today’s society, including the United States Commodity Futures Trading Commission (CFTC).
Addressing the members of the public at his keynote speech on the Future of Crypto Regulation at the Brookings Institution webcast organized on July 25, CFTC Chair Rostin Benham noted an increasing interest of Americans in digital assets.
“We are here today because digital assets are trending towards becoming a part of mainstream American portfolios, with surveys and polls demonstrating that as many as one in every five adults has invested in or otherwise used cryptocurrency.”
In addition, Benham highlighted the massive expansion in the number of participants the industry has received, adding momentum to its further growth. He also stressed that cryptos were the prime example of the “information age we are currently occupying,” with the defining characteristic of the “free, largely unfettered flow of information.”
Redefining the regulatory approach
Due to all these reasons, as well as the onset of the current ‘crypto winter,’ Benham believes there’s a need for “a technology-neutral regulatory approach, guided by the risks within the crypto ecosystem, and not by risks within the underlying technology that makes it possible.”
In his opinion, his agency was ready and well equipped “to address the risks in the cash markets for digital assets through direct oversight.”
“Although less public, the CFTC’s efforts related to digital assets have evolved with the market, and we are now engaged in a more proactive and comprehensive effort across the agency to regulate these markets with the tools currently available to us,” he said.
Therefore, as part of the effort to regulate these markets, Benham announced that the CFTC was evolving its LabCFTC initiative, established by former Chairman J. Christopher Giancarlo, into an Office of Technology Innovation (OTI) to better engage with fintech innovators and the expanding crypto industry.
CFTC’s views of crypto
As it happens, the CFTC officials haven’t always been as enthusiastic about crypto. In May, its commissioner Caroline Pham told investors to consider crypto tokens as “lottery tickets”, stressing that most crypto projects lack customer disclosures which lead investors to believe they are “guaranteed to strike rich,” Finbold reported.
In June, another CFTC commissioner, Christy Goldsmith Romero, also warned about the crypto market’s correlation with the banking sector in the years leading up to the 2008 financial crisis, urging more regulations for the sector before it was too late.