CFTC Chair: Expect More Clearinghouses, Thanks to Crypto

Christopher Giancarlo, Chairman of the US Commodity Futures Trading Commission (CFTC) has given testimony to the US House Agriculture Committee this week, asserting that increased crypto interest should result in more clearinghouses.

Giancarlo also carried on from where he left off in previous testimonies, urging the CFTC to respond quickly to rapidly evolving markets and developments in technology, saying it should look to transform itself into a “21st Century digital regulator” by acknowledging innovations such as blockchain and cryptocurrencies.

He said only an “exponential growth mindset” will usher in relevant and timely regulations for financial technology and innovation, balancing the need for managing tensions between the two while taking care of internal stakeholders.

In particular, the Chairman points at the role of clearinghouses, who he believes have become “critical single points of risk in the global financial system” and how they are proliferating due to their recognized roles as intermediaries between sellers and buyers.

He noted that centralized exchanges played this role when it comes to crypto, but they were vulnerable to hacking and other mismanagement. Therefore, he saw fit for clearinghouses to emerge and take over this role once the industry saw clarity with regulation:

“In addition to U.S. clearinghouses, the Commission has six registered clearinghouses located overseas and exempted four foreign clearinghouses. The Commission anticipates new applications for clearinghouse registration resulting from the explosion of interest in cryptocurrencies; an area in which protection of the cryptocurrencies will be one of the highest risks.”

 

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