CFTC Commissioner Caroline Pham has urged for the implementation of a Regulatory Sandbox during her speech at the pro-market Cato Institute. This concept, pioneered by the UK Financial Conduct Authority (FCA), allows innovative Fintech firms to test their products and services under the supervision of regulators. While not all products may be released to the market, the Sandbox offers an opportunity for regulators to learn from Fintech entrepreneurs and innovators.
Pham emphasized that the world is continually progressing, and it is time for the US to experiment with blockchain technology and digital assets, as the current “wait and see approach” is not effective. Proposing the launch of the first-ever US pilot program for digital asset markets, Pham expressed the need for the US to capitalize on the benefits of this emerging technology rather than constantly playing catch-up.
Pham emphasized that other jurisdictions are actively moving forward, highlighting the need for the US to stay ahead of the curve by embracing change and looking towards the future. She outlined potential parameters for the pilot program, including trading rules, reporting requirements, registration requirements, and risk disclosure statements. Pham believes that such a program would promote responsible innovation.
However, the prospects of implementing Pham’s proposal in the near term are uncertain. The current US administration has shown a hostile stance towards digital assets, with the SEC asserting that all digital assets, except for Bitcoin, are securities and therefore subject to securities regulation. To gain traction, a pilot program may require a change in administration or Republicans holding both the House and the Senate.
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