CFTC chairman urges to base crypto regulation on principles, not rules
The chairman of the Commodity Futures Trading Comission (CFTC) Heath Tarbert announced that the financial management should be based on market principles, not the strict laws.
Principles of crypto encourage market flexibility and innovations
According to the new statement of Harvard Business Law Review published on June, 15th, the CFTC chairman Heath Tarbert made it very clear what the effective digital assets’ regulation should be like. He concluded that wider structure based on principles can stimulate more innovations than a rigid set of rules.
One of the most significant arguments mentioned by Tarbert was that any regulation should focus on encouraging flexibility and innovations.
He wrote, “In general terms, regulation based on principles and recommendations represent a shift from detailed prescriptive rules to high-level, outlined as fully as possible, recommendations that form the basis for new industry standards. As a consequence, the companies who want to operate within the industry, will follow these standards.”
The expert supposed that due to the regulatory model based on principles, CFTC will be able to react quickly to the technology’s and market’s changes without the necessity of restructuring some set of biased rules.
Fewer rules for checklist will also prevent industry players from seeking loopholes when legal conformity may be used for wrongful intents and approaches.
Tarbert also claimed that CFTC has always addressed any regulation on this manner, “We have a unique experience and tradition to be a regulator that is lead by market principles. I mean, simply put, that the Commission relies more on clearly defined principles for reaching the regulatory aims than on following detailed strict rules. We have always be more loyal that other regulators”.
Specific for cryptos and digital assets
Tarbert’s reasoning can be applied to wider financial market but he also mentioned the financial market and cryptocurrency as a field that would profit from following principles, “another field appropriate for applying principles is associated with the development of financial technologies (FinTech), including blockchain and digital assets”.
In the recent Blockchain.News interview Melissa Nettam, the head of LabCFTC, called Tarbert “driving force of innovations”.
The US Commodity Futures Trading Commission founded LabCFTC as the initiative guided by the General Counsel in 2017 aimed at promoting innovations and FinTech competition.
Netram joined LabCFTC in October, 2019, and after taking office the chairman Heath Tarbert declared LabCFTC the independent operational office.
Tarbert is one of the major innovation supporters in digital space even before joining CFTC, and he always spoke about how important it is for the country to stay at the top of technological development.
The expert reiterated his words in one of his reports, “I believe the USA should be the world leader in the technology, and implementing too strict regulation would hinder the development of this significant market”.