Speaking at the digital LA Blockchain Summit, Commodity Futures Trading Commission chairman, Heath Tarbert, said U.S. regulation lags behind crypto and blockchain.
“I would be the first to agree with you that innovation is unlikely to come from the government,” Tarbert told interviewer Anthony Pompliano on Oct. 7 as part of an event segment on the role of digital securities in the derivatives market. Tarbert explained that the private sector often leads innovation, with regulators’ carrying the job of overseeing such advances. He added:
“I see my role as a regulator as not so much innovating ourselves, but we want to be innovative for a regulator, but not necessarily innovate for the community, but we’ve gotta keep up.”
Since the birth of the crypto and blockchain industry roughly 11 years ago, U.S. regulation in general has failed in keeping pace with the quickly developing sector, often using a heavy handed approach. Initial coin offerings serve as one example, bursting onto the scene throughout 2017. In response, regulating bodies came in heavy against this new method of fundraising. As a result, token sales are now all but extinct.
Ripple’s XRP, which has been one of the top crypto assets since 2013 according to rankings from a CoinMarketCap historical snapshot, serves as another example. XRP saw a lawsuit earlier in 2020 claiming the asset as a security — a ruling that should have been clarified years ago.
Many regulatory growing pains seen in the crypto space relate to the Securities and Exchange Commission, or SEC, although regulation as a whole has some catching up to do.
Tarbert assumed his role as CFTC chairman in July 2019, joining the scene amid significant technological advancement following closure on the 2008 market downturn. “It was a good opportunity for us to revisit our mission,” Tarbert explained. The commission crafted an updated mission statement. The CFTC desires “to promote the integrity, resilience, and vibrancy of U.S. derivatives markets through sound regulation,” Tarbert said, quoting the mission statement.
“Of those, vibrancy is the one that gets at the innovation, gets at the innovation point that we don’t want our markets to be stale, we want them to be continuing to develop and be innovative.”
The current landscape, however, appears contrary to this stated desire for innovation. U.S. traders still have a difficult time as many crypto exchanges ban U.S. participants, fearing the country’s stiff regulatory scene. Crypto derivatives exchange BitMEX is one of the most recent examples of these related consequences.