CFTC hearing takes a serious look at blockchain regulation

Yesterday, the U.S. Commodity Futures Trading Commission’s (CFTC) Technology Advisory Committee discussed at a hearing how blockchain applications could reshape the derivatives market, with a focus on standards and collaboration in the industry.

The hearing, which was originally scheduled for January but was later postponed, will feature representatives from traditional financial firms as well as startups in the blockchain industry.

It is worth noting that CFTC commissioners have expressed a willingness to avoid cumbersome regulation of emerging technologies. CFTC Chairman Timothy Massad said:

"I think I can speak for my fellow commissioners that we want to make sure we don't stand in the way of new technologies and potentially encourage the development of those technologies, which can be beneficial."

Comments from Commissioners Sharon Bowen and J Christopher Giancarlo were also positive, with Giancarlo expressing a strong interest in the application of blockchain in financial markets.

Giancarlo said that in his opinion, blockchain technology will have a huge impact on the financial world, including payments, securities settlement and banking.

“Open ledgers could enable new ‘smart’ securities and derivatives that would revolutionize operational and trading efficiencies,” Giancarlo continued. “They could also help reduce the enormous costs of the financial system’s infrastructure through new laws and regulations, including Dodd-Frank.”

Speaking at the blockchain conference were Sandra Ro, head of digital at CME Group; Brady Levy, head of processing at MarkIt; Robert Sams, CEO of Clearmatics; and James Slazas, CFO of ConsenSys.

Driving collaboration

At the hearing, cooperation between financial institutions and regulators was frequently mentioned.

For example, Levy said there is a strong willingness among financial professionals to participate in the process, underscoring MarkIt's belief that open source code will be an important aspect of the process.

"Some of the words in this industry are shared, peer to peer, distributed," he said, "and then we seriously think that open source plays a very important role in this space, probably more than any other action in our industry, maybe."

Regulation included in the discussion

During the hearing, the topic of how regulators can exercise oversight over blockchain networks was also raised.

According to the panelists, this process might involve regulators maintaining nodes on distributed networks or having special access rights to data from those networks.

Ro said:

“I can attest to the CME Group’s view that we are one of the few members of the industry alliance that regulators will at least have an observer role in the network, or, to put it bluntly, have more power to access the network.”

Slazas echoed those comments, suggesting that regulators like the CFTC would be given a “dashboard” that would give them a window into what’s happening on a particular network.

While there is no indication of specific actions the CFTC may take, suggestions from some commissioners at the hearing suggest that the regulator may consider adapting existing regulations to apply to blockchain applications.

In closing remarks, members said further discussion and investigation of blockchain technology was necessary and encouraged.

Original article: http://www.coindesk.com/cftc-regulators-blockchain-hearing/
By Pete Rizzo
Compilation: Overnight porridge
Source (translation): Babbitt Information (http://www.8btc.com/cftc-blockchain-2)