Thursday, March 30, 2023

CFTC’s Mersinger says blockchain too often conflated with trading of cryptoassets

By Suzanne Cosgrove

CFTC Commissioner Summer K. Mersinger last week addressed the absence of women in the high-tech arena and laid out what she sees as the CFTC’s role in the development and regulation of blockchain and the derivatives markets that the agency regulates.

In her speech, delivered to the International Women of Blockchain 2023 Web3 and Metaverse Conference, Mersinger said the CFTC is a “technology neutral regulator.” And in terms of the still-evident gender gap in male-dominated high-tech fields, including blockchain, ”Clearly, there is an opportunity to do better,” she told the group.

Mersinger said the CFTC’s job is to ensure existing and emerging technologies can compete on a level playing field. “Our governing statute, the Commodity Exchange Act, specifically identifies one of its purposes as being to promote responsible innovation and fair competition.”

Innovation a focus. ”In light of the opportunities that an innovative and groundbreaking technology like blockchain presents for the derivatives markets we regulate, my focus is on assuring that we at the CFTC take that mission seriously,” Mersinger said.

“Whether you embrace or dismiss the utility of digital assets, it is hard to argue against the benefits of blockchain technology,” she said. “These benefits go far beyond cryptoassets, and regardless of whether or not you become a crypto adopter, I believe that the underlying technology could have a positive impact on society.”

What’s next. “We need to understand and appreciate the difference between the technology and the assets,” Mersinger said. “Blockchain can be independent of cryptoassets.” In addition, “we need to work together and create a framework for how we will consider digital assets and the underlying blockchain technology under our current federal financial regulatory regime.

“Without some sort of legal framework and clarity, I fear we will be left with regulation through enforcement—which is what we are seeing at this time, “the commissioner said.

Global significance. “We cannot forget that blockchain technology has the potential for global benefits,” she added. “The derivatives markets that we regulate at the CFTC are similarly global markets, and the CFTC historically has been a leader in helping these markets thrive through the development of regulations that are harmonized between countries.”

Mersinger delivered her remarks to the blockchain group last week, before Monday’s CFTC action charging Changpeng Zhao, the co-founder and CEO of Binance, and three entities that operate the Binance platform, with violations of the Commodity Exchange Act and CFTC regulations.