The Technology Advisory Committee of CFTC Discusses DLT Adoption and Crypto Regulation

On Wednesday, March 27, the Technology Advisory Committee for the U.S. Commodities and Futures Trading Commission (CFTC) discussed at length about the strategies to push the adoption of distributed ledger technology (DLT) and the simultaneous need for cryptocurrency regulations.

Among the several reports discussed by the committee, the one presented by Peter Van Valkenburgh, Director of Research at Coin Center, spoke about the different consensus mechanisms. The broadly discussed topic was the shift of Ethereum’s shift from proof-of-work (PoW) to proof-of-stake (PoS).

CFTC Commissioner Brian Quintenz said that Ethereum’s plan to shift could create several regulatory hurdles. Quintenz also added that it could possibly lead to a lot of manipulation as well as the falsification of the ledger.

In December 2018, CFTC expressed its interest in understanding the Ethereal blockchain and how it would compare with Bitcoin. 

Kathryn Trkla and Charley Mills, members of the American Bar Association’s Jurisdiction Working Group, presented another report while speaking on the federal and jurisdictional laws regarding digital assets. They also discussed regarding the current state blockchain and crypto regulations in the U.S. and also other crypto-friendly countries of Malta and Switzerland.

The Distributed Ledger Technology and Market Infrastructure Subcommittee talked about the current adoption of blockchain and its potential use cases. The panel also sought for CFTC’s guidance in particular areas that could contribute to further development of DLT.

Besides the CFTC committee also discussed an earlier report by the International Swaps and Derivatives Association (ISDA) over the digitization of financial transactions and automating trading process in the derivatives marketplace using DLT.

It looks like the derivatives regulator is taking enough efforts to streamline the blockchain and crypto industry with a purpose of establishing transparent systems and processes in place.

In November 2018, CFTC chairman Christopher Giancarlo dropped a proposal of automating regulatory processes using blockchain technology. “We can also envision the day where rulebooks are digitized, compliance is increasingly automated or built into business operations through smart contracts, and regulatory reporting is satisfied through real-time DLT networks,” Giancarlo explained.