Sunday, June 23, 2024

CFTC urges investors to consider crypto tokens as “lottery ticket”.

Caroline Pham, the Commodity Futures Trading Commission (CFTC) commissioner, called out to investors to consider crypto tokens as a “lottery ticket”. She said this in regards to the profits and losses that come with it.

Pham highlighted that most crypto projects lack customer disclosures. As such, customers end up buying the asset thinking that they have struck a gold mine. The executive believes that if people start thinking the same for the novel crypto tokens, it’s frankly lottery tickets. Pham explained that when a person buys a lottery ticket, he or she may get rich quickly or might not.

In regards to Terra’s stablecoin crash, she described it as a tragedy for the markets. CFTC highlighted it as a “reality check” for the stakeholders involved. The crash brought the “risky nature of some assets” to the fore. Moreover, the commissioner said the UST collapse is a pointer for regulators to take action. The crash shows a possible re-emergence of shadow banking where financial activities are facilitated by unregulated intermediaries. Pham said the regulators could extend existing traditional finance laws to the crypto markets. When the framework is already existing, it’s faster to push it up as one is just talking about extending the regulatory perimeter around newer and novel products.

The fall of UST ensued in a debate about stablecoins regulations in the US. Various authorities, bodies, and experts regarded it as a threat to the financial system. But Pham believes there is a need to solve the ambiguity around stablecoins. She said regulators and lawmakers need to determine whether stablecoins, including the algorithm-powered stablecoins, are derivatives. The commissioner pointed out that the recent crash should be enough to compel lawmakers to come up with the right laws.

Cryptured Team
Cryptured Team
The writers team at Cryptured.com is composed of passionate and experienced journalists who cover the latest developments in the crypto and blockchain space. They aim to provide accurate, unbiased and easy-to-understand news and information for their readers, as well as insights and analysis from industry experts. The writers team is always on the lookout for new and exciting stories that can help the general public learn more about the potential and challenges of these technologies.
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