CFTC Commissioner Pham Advocates for CFTC Approach to Crypto Markets

CFTC Commissioner Caroline D. Pham advocated for CFTC jurisdiction over crypto markets and for a principles-based approach to regulation.

At the Nasdaq Technology of the Future Conference, Ms. Pham argued that despite the fact that the digital market is a "potentially new asset class," there are many similarities between these assets and products that are already regulated, such as foreign exchange. Ms. Pham pointed out that issues such as misconduct, the possibility of contagion and bank runs are familiar risks and said that the majority of those issues are addressed by existing frameworks. She added that such frameworks could be tailored to apply to cryptocurrency markets.

Ms. Pham identified 10 fundamental areas for creating a regulatory scheme, including:

• assets being categorized appropriately;

• legislation to ensure oversight against "shadow banking" or a "shadow crypto financial system";

• safeguards to mitigate potential systemic risk;

• safeguards from illicit finance and national security risks such as exploitative money laundering and cybercrime;

• activity and entity-based regulation under regulatory supervision;

• consumer protection through education, market reports and disclosures;

• emphasis on transparency;

• vigorous enforcement of market conduct rules;

• prohibitions on conflicts of interest; and

• rules that promote free markets and innovation.

Ms. Pham advocated for pragmatic solutions that are already applied to existing regulatory frameworks.