Heath Tarbert, Chairman and Chief Executive, CFTC
Malcolm Gladwell said, “A tipping point is that magic moment when an idea, trend, or social behavior crosses a threshold, tips, and spreads like wildfire.”
We are at a tipping point with digital assets.
Digital assets and their underlying technology are pushing conventional boundaries. And the innovation in this area continues apace. Digital asset markets continue to grow, despite the pandemic. At the same time, stablecoins and Central Bank Digital Currencies markets continue to grow because of the pandemic.
During my tenure at the CFTC, I’ve seen firsthand the extraordinary growth of the digital asset markets and the challenges these markets encounter due to regulatory uncertainty.
Despite the small size of digital assets derivative markets relative to the other asset classes we regulate, our regulatory structure needs to be agile and responsive to address this rapid innovation.
First and foremost, classification of digital assets must be addressed. Given digital assets’ unique characteristics and continuous evolution, this is not an easy task. I believe the next Congress should work to provide greater clarity on classification, which will in turn clarify the applicable regulatory authority for this market.
But legislation takes time.
This “tipping point” has shown us that we must act now to address the growing marketplaces of crypto. And each regulator must not act in a vacuum, focused inward on its own jurisdiction. International coordination is essential.
Developing a principles-based approach to digital assets that can be applied globally is imperative. A principles-based approach will provide a flexible and effective framework for innovation to thrive, while also reinforcing market integrity and consumer/investor protection.
Here in the United States, it is critical that federal and state regulators work together to create a digital assets regulatory framework. This will provide more certainty for the marketplace while also mitigating any risk or regulatory concerns for more traditional financial markets.
Regardless of where we sit around the globe, we must acknowledge this evolving market and act. We must anticipate the future. Recognizing this moment in time — this “tipping point” — is the first step.
Read more from our Annual Report 2020, with insights from contributors including Coinbase, Financial Action Task Force, the FSB and more.