CFTC Commissioner Pitches Pilot Program for U.S. Crypto Regulation

Commissioner Caroline Pham is outlining a “time-limited” program to start allowing regulated crypto markets and tokenization, an approach she says has precedents.

AccessTimeIconSep 7, 2023 at 5:45 p.m. UTC

The U.S. watchdog for derivatives markets should create a limited pilot program for regulating cryptocurrencies, said Caroline Pham, one of the members of the Commodity Futures Trading Commission (CFTC).

“I’m recommending a time-limited CFTC pilot program to support the development of compliant digital asset markets and tokenization,” said Caroline Pham, who holds one of the Republican seats on the five-person commission, in remarks prepared for a Cato Institute event on Thursday.

After holding a roundtable to gather ideas, she said, the agency should set up a “program for a specific period of time that incorporates many of the components drawn from past pilot programs, including: registration and eligibility requirements, financial resources and other conditions, risk management, products and contract terms, and other requirements including disclosures and reporting.”

Pham, who leads the CFTC’s Global Markets Advisory Committee and established its subcommittee on digital assets, has suggested a number of crypto initiatives since she arrived at the commission, including a proposal with Hester Peirce, her counterpart at the Securities and Exchange Commission (SEC), to host joint crypto roundtables with the two regulators. But the CFTC is led by Chairman Rostin Behnam, a Democratic appointee, who hasn’t embraced an industry-friendly posture for the agency.

As a result, Commissioner Pham’s overtures toward crypto innovation may remain on the CFTC’s back burner as the industry continues to wait for Congress to establish laws to govern the sector in the U.S.

“Staying ahead of the curve requires being ready to look to the future and preparing to embrace change,” Pham said.

Most of the crypto bills moving through Congress envision the CFTC as a leading regulator for digital asset spot markets, but it’s uncertain whether any legislation will make it to the president’s desk this year or next. Many Democratic lawmakers have been critical of the industry and side with SEC Chair Gary Gensler’s view that crypto businesses should be punished under existing securities regulations.

Edited by Nick Baker.


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Jesse Hamilton

Jesse Hamilton is CoinDesk's deputy managing editor for global policy and regulation. He doesn't hold any crypto.