“I Don’t Believe in Any Kind of ‘Gotcha’ Regulation,” CFTC Commissioner Says in SEC Insider Trading Case

VSOmmodity Futures Trading Commission (CFTC) member Caroline D. Pham told CoinDesk TV on Wednesday that her agency should have had “a seat at the table” before the Securities and Exchange Commission brought e-money allegations. initiated against a former director of the crypto exchange Coinbase (COIN).

Pham, who was sworn in as commissioner in April, said the CFTC also has insider trading enforcement powers.

“I believe that anything that might impact or implicate the jurisdiction of the CFTC is our job to go out there to enforce the law and to make sure that we prosecute wrongdoing,” Pham said in the statement. CoinDesk TV’s “First Mover” show. “If the CFTC is involved in any way, I think we have to have a seat at the table; or if our jurisdiction [is] involved, we must have a place at the table.

Commissioner Pham’s comments came after SEC allegations that a former Coinbase product manager engaged in insider trading. The accused allegedly gave his brother and a friend confidential information about tokens that would be listed on the stock exchange in the near future.

The lawsuit also labeled nine digital tokens implicated in insider trading as “securities,” a first for an SEC action when the issuers of the alleged securities are not defendants. With crypto regulation still in a gray area, this case “could have broad implications,” Pham said.

Pham said there is still a lack of regulatory clarity around many tokens. There are “open questions about some of the tokens described in the complaint, particularly utility tokens and those involving DAOs,” or decentralized autonomous organizations.

A clear path to regulation and compliance, Pham says, can be established through the use of tools agencies already have “that don’t involve taking legal action,” which she describes as “disruptive” in the case of the SEC.

“People need to know the rules so they can follow them,” she said. “I don’t believe in any sort of ‘gotcha’ regulation, where the rules are constantly changing on people and they don’t know what they’re supposed to do.”

This is not the first time that Pham has commented on “regulation by enforcement”. She spoke about the topic in a July 21 speech where she noted that an effective encryption framework would be best achieved collaboratively.

Along the same lines, SEC Commissioner Hester M. Peirce has also expressed disappointment with the SEC in the past regarding the agency’s relationship with crypto. In June, she pointed to the agency’s “confusing” and “out of character” approach to regulation.

Pham, meanwhile, told CoinDesk that “the most effective regulation is when it is clear.” At the moment, she said, it is difficult to determine which agency is leading an effective regulatory framework. “I think a lot of people have questions,” she said.

Pham said that ultimately it is “up to regulators” to make things clear so people know what they can and cannot do in the crypto industry.

Read more: The SEC provides regulatory clarity, but not what everyone wants

UPDATE (July 27, 2022 19:25 UTC) – Clarifies details of SEC lawsuit.

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