Regulators are also optimistic! CFTC Chairman: Blockchain will become part of the financial system

The Chairman of the Commodity Futures Trading Commission (CFTC), Heath Tarbert, recently sat down for an interview with CoinDesk, where he delved into discussions about blockchain and cryptocurrency. During the interview, he also revealed his own vision for the future of blockchain, emphasizing that regulatory agencies should not nitpick on promising developments in the cryptocurrency space.

Blockchain Will Be an Integral Part of the Financial System

As the Chairman of the U.S. Commodity Futures Trading Commission (CFTC) completes his first year in office, Tarbert shared his extensive independent views on the borderless and decentralized nature of cryptocurrencies in an interview with the foreign media CoinDesk.

He expressed a deep fascination with decentralized finance (DeFi) and a curiosity about how developers have integrated centuries of human behavior and economic incentives into these digital financial systems, originally developed for defense and security purposes using encryption technology. He stated:

These developers have effectively built economic systems in the digital asset space, incorporating economic incentives and trustless economies in less than a decade. I am fascinated by this. Imagine a future where blockchain becomes an integral part of our current financial system; it will be a revolutionary technology.

Assumed Office in July 2019

Tarbert transitioned from his role as the Assistant Secretary for International Markets at the Department of the Treasury to the CFTC. Although not new to digital assets, he found that he needed to learn extensively to adapt to the rapidly changing crypto market. Given that the CFTC's primary responsibility lies in the derivatives trading market, he mentioned:

While many cryptocurrencies are currently outside the CFTC's jurisdiction, new products will ultimately be introduced into the derivatives market. To be a successful Chairman of the CFTC, which oversees the derivatives market, I have tried to understand and learn about various products in different areas, including cattle, oil, wheat, and a significant amount of crypto-related knowledge. It's too cutting-edge and revolutionary, so I have spent a lot of time learning about how it operates in the ecosystem.

Shortly after assuming office, Tarbert announced last October that Ethereum would be considered a commodity, opening the market for Ethereum futures contracts. He believes that the next major challenge will be to establish a robust regulatory framework for cryptocurrencies and derivatives trading markets in the coming years, providing flexible and clear standards for market participants and regulatory agencies.

The Borderless Nature of Cryptocurrencies

Tarbert is fully aware of the borderless nature of cryptocurrencies, with developers and users coming from different countries worldwide. He believes that countries should collaborate on this matter instead of having independent regulatory systems for each country. He emphasized that the U.S. should coordinate with states and even other countries to establish and adjust crypto regulations. He stated:

Commodities are products from all over the world, right? Wheat is also a commodity, so the prices of these futures and derivatives are synchronized globally. Now, looking at crypto assets, as commodities, they should fundamentally have no difference from traditional assets like wheat.

Tarbert concluded that international standards for cryptocurrencies are crucial for the crypto market in the future, similar to the importance of the Basel Accords established over the past thirty years for banks. He hopes that regulatory agencies will consider the necessity of international cooperation and reiterated the importance of avoiding independent regulatory systems for each country.

Note: The Basel Accords were proposed by the Bank for International Settlements in 1988 with the aim of reducing competition among banks and lowering systemic risk.