CFTC Commissioner Seeks Crypto Regulation after Terra Collapse

Caroline Pham, the Commissioner of the Commodity Futures Trading Commission (CFTC), recently talked elaborately about the regulator’s plans for cryptocurrency regulations and customer protection.

While talking to two of the major US media platforms, Pham touched on several key crypto-related issues like shadow banking, stablecoins, customer protections, regulation and enforcement.

She revealed that one of the primary questions among regulators and lawmakers is whether to consider stablecoins, including algorithmic stablecoins as derivatives.

“The SEC regulates securities, but for everything that is not a security the CFTC CFTC The 1974 Commodity Exchange Act (CEA) in the United States created the Commodity Futures Trading Commission (CFTC). The Commission protects and regulates market activities against manipulation, fraud, and abuse trade practices and promotes fairness in futures contracts. The CEA also included the Sad-Johnson Agreement, which defined the authority and responsibilities for the monitoring of financial contracts between the Commodity Futures Trading Commission and the Securities and Exchange Commiss The 1974 Commodity Exchange Act (CEA) in the United States created the Commodity Futures Trading Commission (CFTC). The Commission protects and regulates market activities against manipulation, fraud, and abuse trade practices and promotes fairness in futures contracts. The CEA also included the Sad-Johnson Agreement, which defined the authority and responsibilities for the monitoring of financial contracts between the Commodity Futures Trading Commission and the Securities and Exchange Commiss Read this Term probably has some regulatory touchpoint over it. We have the regulation over derivatives based on commodities, but we also have certain areas where we directly regulate spot markets,” said Pham.

Another focus area was shadow banking using cryptocurrencies. It became a key issue after the collapse of the stablecoin project, Terra, which promised a return of up to 20 percent for USD-pegged stablecoin Stablecoin Unlike other cryptocurrencies like Bitcoin and Ethereum, stablecoins are cryptocurrencies that have been designed to keep a stable value. Placing a greater emphasis on stability over volatility can be a huge draw for some investors. Many individuals can be turned off from large swings and uncertainty presented by cryptos relative to other traditional assets.Stablecoins control for this volatility by being pegged to another cryptocurrency, fiat money, or to exchange-traded commodities, including Unlike other cryptocurrencies like Bitcoin and Ethereum, stablecoins are cryptocurrencies that have been designed to keep a stable value. Placing a greater emphasis on stability over volatility can be a huge draw for some investors. Many individuals can be turned off from large swings and uncertainty presented by cryptos relative to other traditional assets.Stablecoins control for this volatility by being pegged to another cryptocurrency, fiat money, or to exchange-traded commodities, including Read this Term deposits.

“I think what I’m worried about is that without appropriate customer protections in place, and the right disclosures, people are buying some of these crypto tokens thinking that they’re guaranteed to strike it rich,” she added.

A Collaborative Effort

Pham, who assumed the top CFTC post in April, thinks that the collapse of Terra has made it crucial for immediate crypto regulations to save public interest. She wants a collaborative approach with the US Congress toward the regulations.

“So, I really welcome the efforts of Congress to provide a clear and holistic regulatory framework over crypto, and to make it very clear and even to expand the CFTC's jurisdiction in this space, to make sure that there's that clarity for the industry so that way there can be more growth in compliant digital asset markets with adequate protections for the retail public,” the Commissioner said.

Meanwhile, the regulator continues to bust violators in the cryptocurrency investment space, including the ones in the spot markets. The agency has already made over 50 enforcement actions, imposing $750 million in penalties.