After the recent ruling in the Ripple case, there has been a heightened significance surrounding crypto regulations. While the industry as a whole celebrated this development, the SEC appeared to be disappointed. In a recent interview with Bloomberg, Caroline Pham acknowledged the potential for collaboration between the SEC and CFTC in shaping crypto rules.
Currently, there exists confusion regarding which regulatory agency holds jurisdiction over the crypto industry. Pham proposed the idea of a joint approach as an ideal solution, emphasizing the importance of regulatory clarity. She expressed her anticipation for participating in both international and domestic working groups of the Financial Stability Board (FSB) to ensure a comprehensive regulatory framework for cryptocurrencies.
When questioned about the tokenization of assets and the lack of overarching regulations, the CFTC Commissioner described it as a complex matter that requires mature deliberation. She highlighted that beyond speculative crypto assets, institutions, central banks, and asset managers have recognized the potential to modernize the financial market infrastructure through tokenization of real assets since at least 2016 and 2017.
The Commissioner expressed optimism specifically regarding the use of blockchain technology for securities. A recent presentation demonstrated how leveraging this technology could lead to savings of approximately $2 billion in back office expenses related to clearing and settlements. She emphasized that these figures are substantial and indicative of real opportunities in the market, with investment banks projecting a potential $4 trillion to $5 trillion opportunity by 2030.
Money Market Integration: Crypto’s Promising Path Forward
Pham’s vision for the future is to avoid segregating tokenized markets from traditional financial markets. While acknowledging the importance of innovation, she stressed the necessity of implementing regulatory safeguards to protect investors. She believed that having such guardrails in place would not hinder progress but rather ensure a responsible and secure environment for the industry.
Additionally, Pham anticipated the expansion of practical applications on blockchain technology, such as the integration of money market funds, in the coming years.