We had the pleasure of welcoming CFTC Commissioner Dan Berkovitz to DACOM for a second year in a row. This time round, he joined Solidus Labs CEO for a keynote fireside chat in which he explained some key actions which the CFTC is already taking to deal with DeFi and embrace change.
How is CFTC dealing with DeFi?
Commissioner Berkovitz explains how the CFTC is dealing with the explosion in DeFi trading. He explains how it is often the case in which the private sector would develop new technologies which then require regulation. Technology has always been a big part of financial regulation.
Mr Berkovitz reminded us of the time when trading moved from pit trading to computer trading, and people would ask “Who is ultimately responsible when two computers trade?” or “What happens if two computers disagree on the trade?” The new Labs CFTC is a new office specifically devoted to follow tech advances in the ecosystem and also act as liaison with the broader agency.
Responsible Innovation and Fair Competition
Commissioner Berkovitz explained the meaning behind these two core values within CFTC. Responsible innovation means innovation can’t come at the expense of good customer protection. Fair competition means that regulated companies can't compete with unregulated entities. It is the responsibility of the CFTC to assess what needs to be regulated to safeguard interests of all market participants - including intermediaries that serve critical functions such as clearing funds or operating exchanges.
CFTC is working closely with regulators including the SEC, sharing data and insights. What’s more, Commissioner Berkovitz explained the key role that market surveillance will play - not as a “spy” but as an valuable source for market data analysis.
“An unregulated system in which nobody is accountable and the customer is on its own can be problematic. The burden of regulation which usually falls on intermediaries (i.e. reporting, record keeping, etc) would fall directly on market participants.” - Commissioner Dan Berkovitz, DACOM 2021