Courts pave way for crypto regulatory clarity in the US: CFTC commissioner

• Pham said that she hoped other regulators, such as the SEC, will collaborate to develop a “holistic approach” to crypto regulation.
• Commissioner Pham also emphasized the significance of the tokenization of real-world assets.

Commodities Futures Trading Commission (CFTC) Commissioner Caroline Pham believes that recent court judgements are paving the path to regulatory clarity regarding cryptocurrency in the United States. Commissioner Pham made this remark while speaking to Bloomberg TV on 17 July.

Thank you @BloombergTV for the opportunity to talk about our important GMAC initiatives! Beyond crypto, institutional markets & central banks are looking at tokenization of real assets like bonds. Today, we heard about international, US & EU developments & key takeaways. https://t.co/cWTShDy2Bf

— Caroline D. Pham (@CarolineDPham) July 18, 2023

Pham said,

“You know, last year I said that we were going to see regulatory clarity first in the courts around the definition of a security, and I think we’ve seen that with some very big court opinions that have been released.”

Pham said that she hoped other U.S. regulators, such as the Securities and Exchange Commission (SEC), will collaborate to develop a “holistic approach” to crypto regulation.

Last week the SEC’s lawsuit against the crypto exchange Ripple finally reached a conclusion. As per the court judgment, the programmatic sale of Ripple’s native cryptocurrency, XRP, did not constitute the offer and sale of investment contracts.

However, the sale of XRP tokens to institutional investors constituted the unregistered offer and sale of investment contracts in violation of Section 5 of the Securities Act.

SEC Chair Gary Gensler called the judgement “disappointing” at a press conference held on 17 July. Gensler has previously suggested that every digital asset aside from Bitcoin is a security, though his agency has not gone as far as to say the same.

Gensler has vowed to continue with enforcement actions following the recent Ripple triumph.

On Tokenization of RWAs

The CFTC commissioner  also emphasized the significance of the tokenization of real-world assets (RWAs). She said there are real opportunities to modernize financial markets through the tokenization of money market funds on blockchain networks.

Pham said,

“If you cut away from all the frogs and the get-rich-quick schemes, what institutions, central banks and asset managers have known since at least 2016 and 2017 is that there’s a real opportunity to modernize financial market infrastructure through tokenization of real assets.”

Commissioner Pham is optimistic about securities on a blockchain. She added,

“So you’ve had investment banks talk about a potential 4 trillion to $5 trillion opportunity by 2030.  These are real numbers and we’re talking about real markets.”

Pham hoped that there will be no distinction between tokenized markets and financial markets in the future. Without undermining innovation, she emphasized the significance of having “guardrails” in place.