- Former Acting CFTC Chair Caroline Pham said the digital-asset market can be overseen under the current regulatory framework without a separate crypto market structure law.
- She said the CFTC's principles-based regulatory framework can cover derivatives tied to AI computing resources as well as leveraged crypto trading for retail investors, and that federal oversight is more effective for investor protection.
- Pham also stressed the different roles of tokenized deposits, stablecoins, tokenized stocks, and NFTs, and said tokenized securities trading on the New York Stock Exchange and Nasdaq could begin in earnest.
Former Acting Commodity Futures Trading Commission Chair Caroline Pham said the digital-asset market can be overseen under the current regulatory framework without a separate crypto market structure law.
The Block reported on October 12 that Pham, speaking at the Token2049 conference in Singapore, said that under the Commodity Exchange Act, virtually everything qualifies as a commodity except onions and movie box-office receipts, underscoring the breadth of the CFTC's authority. Pham now serves as chief legal officer and chief administrative officer at crypto payments company MoonPay.
She said the industry has turned its attention to rulemaking by regulators after the CLARITY Act failed to advance last month. The CFTC's existing framework is principles-based, making it flexible enough to apply to new financial products. Pham said that could also extend to derivatives tied to AI computing resources.
Pham also endorsed the CFTC's recent push to regulate leveraged crypto trading for retail investors. Under Chairman Michael Selig, the agency has begun seeking public comment on related rules. She said investor protection would be better served if trading took place on federally supervised exchanges rather than under a patchwork of state-level rules.
Pham also drew a distinction between stablecoins and tokenized deposits. She said settling an entire day's trading in financial markets in real time on blockchain would require about $15 trillion in cash. In large transactions between financial institutions, she said, it is more important to net claims and obligations before settling only the difference. On that basis, she said tokenized deposits would play an essential role in institutional financial transactions. Stablecoins, by contrast, are better suited to transactions where counterparties lack trust or where assets and payments must be exchanged simultaneously.
Pham also highlighted the growth potential of tokenized stocks. She said trading in tokenized securities backed by actual corporate shares on the New York Stock Exchange and Nasdaq could begin in earnest within the next two years. She added that formal tokenized stocks that guarantee shareholder rights such as voting rights should be distinguished from synthetic tokens created without an issuer's approval. She also said the NFT market, including tokens used for customer compensation and memberships, could grow again once regulatory uncertainty is resolved.
[email protected]'m reporter Suehyeon Lee, your Web3 Moderator.