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When we think of regulatory authorities, we normally expect government officials to monitor financial services companies, jailing scammers, and generally being a neck problem for all those who fall within their jurisdiction, but a key part of their mission is that too. to inform the investor public and keep them aware of important trends. In this last perspective, it is encouraging that the Commodity Futures Trading Commission (CFTC), the agency with jurisdiction over trade in currencies and digital assets in the United States, has published a primer on Blockchain Technology and Smart Contracts.
Regulators around the world have been inconsistent in their attacks or in the acceptance of cryptocurrencies or in anything that has to do with this current phenomenon. It did not help the first zealots of digital tokens to scream from rooftops that the scrambled would replace all legal currencies and abolish the need for a central banking authority, the primary banking regulator in each jurisdiction. Now it is encouraging that a leading agency, like the CFTC, has spent resources to gain a deep understanding of the basics of cryptocurrencies and is sharing this information on a broad basis.
The press release actually originated from LabCFTC and started:
This primer is part of the LabCFTC effort to engage with innovators and market participants on a range of financial technology topics (FinTech) and follows a 2017 reference manual on virtual currencies and the agency's recent FinTech Forward conference.
LabCFTC was launched in May 2017 and is dedicated to facilitating the innovation of financial technology (FinTech) that improves the market, informs policy and ensures that the agency has regulatory and technological tools and tools for keep up with changing markets. LabCFTC is designed to make CFTC more accessible to FinTech innovators and serves as a platform to inform the Commission about understanding emerging technologies.
The primer is a 32 page document, which reads like a business presentation. Start by defining smart contracts and outlining detailed use cases and possible applications of smart contracts, their benefits and risks and the challenges faced by this blockchain-based approach. The version emphasizes that:
As with other areas of innovation, while there are many potential benefits, it is also critical to understanding and mitigating risks and challenges; the primer then works through a series of operational and management risks, technical, cyber-security, fraud and manipulation and governance.
The LabCFTC director Daniel Gorfine said in the statement that:
Smart contracts are used to increase automation in our markets and can have an impact on a wide range of economic activities. This handbook focuses on explaining smart contracts, analyzing how they can affect our markets and highlighting potentially new risks and challenges. "This statement is in line with the laboratory's mission to" enable the CFTC to be proactive and forward-looking while the FinTech applications continue to develop.
It is also a positive take-away for all those who participate today in the crypto space. Actions like these are good indications that the relationship between regulators and the cryptocurrency revolution is becoming less combative and more mutually beneficial, while technology evolves. Cooperation will be necessary for cryptocurrencies to go beyond current operational shortcomings.
CFTC and ASIC have recently signed an agreement to cooperate and support innovation through their respective financial technology initiatives (FinTech) – CFTC LabCFTC and ASIC Innovation Hub.
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