CFTC Commissioner Advocates for Limited Pilot Program in U.S. Crypto Regulation

Caroline Pham, a member of the Commodity Futures Trading Commission (CFTC), has proposed the creation of a time-limited pilot program aimed at regulating cryptocurrencies and supporting the development of compliant digital asset markets and tokenization in the United States. Pham, who holds one of the Republican seats on the five-person commission, made these recommendations during a Cato Institute event.

The suggested pilot program would involve several key components drawn from past pilot programs, including registration and eligibility requirements, financial resources and other conditions, risk management protocols, product and contract terms, as well as other requirements encompassing disclosures and reporting. Pham emphasized the importance of staying ahead of the curve and being prepared to embrace change to effectively regulate the evolving crypto landscape.

Pham, who leads the CFTC's Global Markets Advisory Committee and established its subcommittee on digital assets, has been an advocate for various crypto initiatives since joining the commission. Notably, she collaborated with Hester Peirce, her counterpart at the Securities and Exchange Commission (SEC), on a proposal to host joint crypto roundtables involving both regulators. However, Chairman Rostin Behnam, a Democratic appointee who heads the CFTC, has not adopted a notably industry-friendly stance for the agency.

While Commissioner Pham's efforts have highlighted the importance of crypto innovation, the CFTC's approach to crypto regulation may continue to be relatively cautious as the industry awaits Congressional action to establish comprehensive laws governing the sector in the United States. Several crypto-related bills are currently in progress in Congress, with many envisioning the CFTC as a leading regulator for digital asset spot markets. However, the timeline for any legislative action reaching the President's desk remains uncertain, as some Democratic lawmakers have expressed concerns about the industry and aligned themselves with SEC Chair Gary Gensler's view that crypto businesses should be subject to existing securities regulations.