CFTC Commissioner Dawn D. Stump described regulatory challenges presented by financial technology market innovation.
In remarks before the Chamber of Digital Commerce, Commissioner Stump said that the pace of market innovations in the areas of financial technology, such as digital assets and decentralized finance, was increasingly presenting the CFTC with "novel issues" that require "comprehensive thinking" by regulators. She acknowledged that the CFTC's current approach of relying on enforcement actions to solve these issues was "insufficient," and that the current regulatory framework needed to evolve to meet market demands. She argued that the CFTC must "bridge the gap between its enforcement and oversight functions by setting more clearly defined regulatory expectations for new, innovative applications in the derivatives market infrastructure."
Ms. Stump identified three areas where the CFTC needs to address regulatory challenges posed by innovation:
- trading platforms (designated contract markets and swap execution facilities) - how to achieve effective regulation in ways that allow infrastructure providers and their customers to profit from innovation;
- clearinghouses (derivatives clearing organizations) - how to accommodate new retail-focused derivatives clearing organizations that are moving away from an intermediary model in a way that maintains consumer safety while encouraging growth; and
- brokers and counterparties (futures commission merchants) - how the CFTC's rules for a futures commission merchant should apply to retail commodity transactions involving digital assets, such as Bitcoin.
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