CFTC Chairman: Global stablecoin is the only systemic risk

Author: Liang CHE

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Heath Tarbert, chairman of the US Commodity Futures Trading Commission (CFTC), said that global stablecoins are the only systemic risk in the financial sector.

The CFTC posted this speech on YouTube video site Tarbert during a lecture on financial regulations at Harvard's Kennedy College. In his speech, he talked about the role of the CFTC in digital asset regulations, the way jurisdiction is divided between the CFTC and the SEC, and the regulatory risks involved with cryptocurrencies.

Tarbert said that in addition to the possible global stablecoin, systemic risk in the financial sector is not a real problem. He also mentioned that the Financial Stability Board held several discussions on digital assets and identified some of the major issues with most cryptocurrencies.

The first issue Tarbert mentioned was that cryptocurrencies could be used for money laundering and terrorist financing. The CFTC, FinCEN and SEC recently issued a joint statement requiring US regulated entities to comply with anti-money laundering laws and the Patriot Act when dealing with digital assets.

The second issue he mentioned was investor protection, noting that "the cryptocurrency ICOs that some people are issuing are tantamount to fraud."

Regarding the division of jurisdiction between various regulatory agencies, the chairman of the CFTC stated that the CFTC has the power to supervise commodities and the power to supervise and enforce commodities derivatives. "If it's just commodities, we don't necessarily have regulatory powers, but we do have enforcement powers. If someone commits fraud in a commodity market that is not traded on a futures exchange, it may still affect the stability of the futures market."

He added that, in theory, the CFTC could track down cryptocurrency exchanges that perform fraud and price manipulation, even though those exchanges do not have to register with the CFTC. He also explained that technically, securities are also a commodity, but once they become securities, they enter the jurisdiction of the United States Securities and Exchange Commission (SEC). However, for securities and futures, the CFTC and the SEC have joint jurisdiction.

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