US crypto policy stronger abroad than at home: CFTC Commissioner Pham

The US has so far failed to establish laws for the crypto industry, but international pressure could force it to follow other jurisdictions, like the European Union.

That is according to Caroline Pham, a commissioner at the US Commodity Futures Trading Commission.

“The need to adhere to the international standards will actually hold the US in alignment with the rest of the world. I think that actually probably helps the US deal with some of the political challenges,” Pham said at a Brussels event in the European Parliament on Tuesday evening.

The comments come as crypto has been hurled into the stateside political discourse, with the industry and politicians actively engaging in the debate about how to best regulate digital assets ahead of this year’s presidential election.

Even so, Pham noted the US’ bona fides in shaping international crypto policies, which could then end up moulding the nation’s own rules.

‘Negative on digital assets’

“The public and a political narrative in the US is negative on digital assets,” Pham said.

But the US is taking a stronger role in shaping crypto policy around the world, according to the commissioner.

“You wouldn’t necessarily know this from the political discourse in Washington, but the US has been very active in participating in the international fora,” Pham said.

The US Securities and Exchange Commission mostly presents itself as an adversary to the crypto industry, with Chair Gary Gensler at the helm. A series of hostile, high-profile lawsuits alleging violations of securities laws are shaping the crypto sector in the US.

In contrast, the CFTC is often perceived as a friendlier regulator — though it has also sued crypto firms like Binance and Coinbase. A US House bill proposes to hand the CFTC more oversight on crypto, rather than the SEC.

For example, Pham sponsors a Global Markets Advisory Committee with a digital assets subgroup that develops policy recommendations.

On March 6, the advisory committee will vote on a report that recommends a taxonomy of digital assets.

The US regulation-by-enforcement approach contrasts the European Union’s, where a package of legislation on digital finance — including rules for crypto markets, tokenisation of financial instruments and cybersecurity for financial institutions — is coming into effect over the coming year.

The “tables have turned,” Pham said, as “the EU is rulemaker, and US is rule taker.”

Pressure on the US

The international standard-setting work that ensures jurisdictions around the world are providing the crypto industry with a coherent regulatory environment should be developed upfront rather than “an after-the-fact patch-up job,” Pham said.

And it gives hope that the international work on crypto policy will in turn put pressure back on the US to comply and develop a rulebook.

The SEC has been “instrumental in coordinating international engagement” on digital assets, according to Pham.

The SEC is a member of the International Organization of Securities Commissions, whose 231 members regulate over 95% of the securities markets globally.

The IOSCO Fintech Task Force has not been soft on crypto in their recommendations, which were finalised in December.

Under the latest recommendations, DeFi would cast a wide net on who would be subject to the same kind of regulations applying to traditional finance, regardless of the technology or organisational makeup used. Some in the industry fear such rules would stifle innovation.

The US is also active in other international watchdog bodies, like the Financial Stability Board. The FSB is pushing countries to implement its recommendations on regulating crypto by next year.

Inbar Preiss is DL News’ Brussels-based regulation correspondent. Contact her at inbar@dlnews.com.