While the world has seen some harshness from the SEC towards cryptocurrencies, the other regulatory that looks after commodities in the USA, The Commodity Futures Trading Commission (CFTC) has been quite welcoming. In a recent move to bolster innovation in the space, the CFTC has released premier on smart contracts.
CFTC premier makes effort to engage market participants
The primer released by Commodity Futures Trading Commission’s LabCFTC sets out to define “smart contracts,” including by exploring their history, characteristics, and potential applications that may eventually impact daily life. The primer also includes graphics to help explain early self-executing software logic evolving into current smart contract technology – for example, starting with a simple vending machine illustration and then discussing more complex examples, including credit default swap contracts
The official announcement quoted LabCFTC Director Daniel Gorfine saying
“Smart contracts are being used to drive further automation in our markets and may have an impact across a range of economic activities,” “This primer is focused on explaining smart contracts, exploring how they may impact our markets and highlighting potentially novel risks and challenges.”
The premier also includes a section which mentions a range of operational, technical, cybersecurity, fraud and manipulation, and governance risks and challenges as the regulator believes that it is critical to understand and mitigate risks and challenges to enjoy the potential benefits of the new innovation.
The premier also highlights CFTC’s role to protect market users and their funds, consumers, and the public.
The premier is a work of LabCFTC which was launched in 2017 and is dedicated to facilitating market-enhancing financial technology (FinTech) innovation, informing policy, and ensuring the agency has the regulatory and technological tools and understanding to keep pace with changing markets. LabCFTC was designed to make the CFTC more accessible to FinTech innovators and serves as a platform to inform the Commission’s understanding of emerging technologies. LabCFTC also enabled the CFTC to be proactive and forward-thinking as FinTech applications continue to develop and to help identify related regulatory opportunities, challenges, and, risks.
While CFTC is clear on its stance with blockchain and cryptocurrencies, now its time for SEC to do the same for innovation to flourish in the US.
Will SEC follow CFTC’s roadmap in allowing cryptocurrencies to flourish in the US? Do let us know your views on the same.
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Nilesh Maurya has been associated for past 8 years as an Investment Banker with Omega Capital, a bespoke Investment Banking outfit having offices in Mumbai, New York, Singapore, and Dubai. He has been a regular contributor to business publications such as Business India and Market Express and has been a mentor to many start-up companies. Nilesh Maurya has been associated for past 8 years as an Investment Banker with Omega Capital, a bespoke Investment Banking outfit having offices in Mumbai, New York, Singapore, and Dubai. He has been a regular contributor to business publications such as Business India and Market Express and has been a mentor to many start-up companies. Follow him on Twitter at @KoinKing1 or connect with me on linkedin.