U.S. regulators could have uncovered some of the interconnectedness and ensuing fraud that led to last year’s FTX collapse and industry contagion, Caroline Pham has said. The Commodity Futures and Trading Commission (CFTC) commissioner called on regulators to do more to regulate the industry.
Following the mid-year collapse sparked by LUNA and its sister token UST, Pham called for a public inquiry into the contagion, she claimed in an interview with Bloomberg.
“I have to ask the question – if we’d had that kind of public inquiry, could we have uncovered some of this interconnectedness and some of these risks that have built up?” she asked.
I talk about my 2023 regulatory outlook, international engagement (75+ mtgs with policymakers), and distinguishing between crypto financial activities, crypto non-financial activities, and use of blockchain technology. Watch full interview—starts at 11:45 https://t.co/bvXizlIsU0
— Caroline D. Pham (@CarolineDPham) January 18, 2023
Pham believes that U.S. regulators can do better to offer clarity to the digital asset market. While there have been calls for legislators to formulate new laws for the industry, she pointed out that regulators can “use the existing authority to provide the clarity that’s needed now.”
The CFTC has become more prominent in the digital asset industry recently. Led by Chairman Rostin Behnam, the agency is now pushing for jurisdiction over the industry, a quest that has set it on a collision course with the SEC.
Pham has been an outspoken critic of the current regulatory regime, and last year, she took shots at the SEC’s “regulation by enforcement.” She also visited Ripple’s offices in California last September amid its ongoing legal battle with the SEC.
Pham told Bloomberg that the CFTC has to keep thinking about what more it can do to regulate the digital asset industry.
“I’d like to see the CFTC and other regulators provide more guidance this year. I’m very hopeful that we’ll see more clarity in the U.S. I hope that we can create some industry standards and best practices that people can start doing today and not wait any longer,” she said.
The commissioner called on regulators to clearly define what tokens are considered securities, which will be under the SEC—as well as derivatives—which are under the CFTC. Then there are NFTs, Web3, utility tokens, and the use of blockchain technology, all of which she called on regulators to police.
The continued laxity by U.S. regulators risks seeing the country fall further behind its peers who are aggressively adopting and regulating digital assets and blockchain technology, she added.
Watch: SEC Commissioner Hester Peirce on Bitcoin Association’s Blockchain Policy Matters
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