According to Chris Giancarlo, a Commissioner at the US Commodity Futures Trading Commission (CFTC). The primary role of the agency is not enforcing regulatory measures over digital currency trading platforms and other cash markets. Instead, the CFTC intends to curb the prevalence of fraud in the futures industry. Chris made this remarks while responding to a questioned posed by Congressman Alma Adams of the House Agricultural Committee. The hearing aimed to assess the immediate future plans of the CFTC, mainly concerning the regulation of the crypto space and adoption of blockchain technology.
Lagging Behind in Understanding Blockchain
In response to another query, Giancarlo disclosed that the CFTC had already been approached by a consortium of the six most popular banking institutions in the world. In their proposal, the banks informed CFTC of the ongoing development of a blockchain prototype for making bank payments and tracking credit defaulters. Moreover, the banks invited the CFTC to participate in the project by relinquishing control of the master regulatory node to the agency. However, the CFTC was inclined to decline the offer, since it is classified as a gift in their bylaws.
Additionally, Chris stated that the CFTC cannot establish its own blockchain framework because such an initiative requires substantial financial backing which has to be passed by the Congress’s appropriations committee. Due to this and other restrictions, the CFTC is finding it hard to match its peers in the understanding of the concept of blockchain technology. Precisely, Chris said that the commission is ‘four years behind, noting that the Bank of England recently introduced a blockchain complaint payment settlement system. He further criticized the current method employed by the CFTC (use of subpoenas), stating that the ideal way of understanding blockchain was forging partnerships with the key stakeholders in the sector.
When asked whether the CFTC would like its mandate expanded to include the regulation of crypto markets, Giancarlo stressed that the commission cannot oversee the registration standards for crypto trading platforms. Rather, the CFTC’s jurisdictions stipulate that its role is to control fraud regarding the futures investments. Nonetheless, Chris indicated that in the future, it might be necessary for the government to enforce such regulations. The best course for now, however, is to emulate the regulation template that was deployed during the early days of the internet revolution.
CFTC does not Regulate Crypto Markets
Furthermore, Chris reiterated that the CFTC does not exercise control over retail markets such as Bitcoin. As per Giancarlo, that role is designated to the Securities and Exchange Commission (SEC). This, however, could change depending on the future development of the crypto market. In conclusion, Chris stated that despite the current craze around digital currencies, the CFTC still perceives the sector as a small market. Typically, the CFTC is concerned with markets whose capitalizations exceed the $1 trillion mark.
To bridge the four-year disparity in blockchain knowledge, Chris propped the shifting from human-based analysis to the implementation of Big Data analytics. While this transition is costly, it would result in the production of efficient results. Regarding this, Chris stated that the CFTc is currently performing well, at least in his opinion. He further noted that they were making significant progress, despite the notion that they are lagging behind.