‘I Don’t Believe in Any Kind of Gotcha Regulation’: CFTC Commissioner Says Following SEC’s Insider Trading Case

Commodity Futures Trading Commission (CFTC) head Caroline D. Pham told CoinDesk TV Wednesday that the agency should have had “a seat at the table” ahead of the Securities and Exchange Commission’s move to bring insider trading allegations against a former manager at crypto exchange Coinbase.

Pham, who was nominated by President Joe Biden to fill a Republican seat in April, noted the agency also has insider trading enforcement authority.

“I believe that anything that might impact or implicate the CFTC’s jurisdiction, it’s our job to go in there to enforce the law, and to make sure that we’re prosecuting wrongdoing,” Pham said on CoinDesk TV’s “First Mover” show. “If the CFTC is involved in some way, I think we have to have a seat at the table, or if our jurisdiction [is] involved, we have to have a seat at the table.”

Commissioner Pham’s comments come amid 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 exchange in the near future.

The lawsuit, which is the first of its kind for the SEC, also labeled nine digital tokens as “securities.” With crypto regulation still in a gray area, “the case could have broad implications,” Pham said.

But Pham said there’s still a lack of regulatory clarity around many tokens. There are “open questions around some of the tokens that are described in the complaint, particularly utility tokens and those involving DAOs [decentralized autonomous organizations].”

A clear path toward regulation and compliance, according to Pham, can be established via the use of tools the agencies already have “that don’t involve bringing enforcement cases,” which she describes as “disruptive” in the SEC’s case.

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

Commissioner Pham’s comments are underscored by a statement she made on July 21, 2022, when she spoke out against “regulation by enforcement,” noting an effective crypto framework would be best achieved in a collaborative manner.

In a similar yet more poignant vein, SEC Commissioner Hester M. Peirce has expressed her disappointment with the SEC when it comes to the agency’s relationship with crypto. In June of this year, Peirce, who is also known as Crypto Mom, made a statement in which she highlighted the agency’s “puzzling” and “out-of character approach” to regulation.

Pham emphasized that “the most effective regulation is when it’s clear.” At the moment, it is difficult to pinpoint who is spearheading an effective regulatory framework. “I think a lot of people are asking themselves questions,” she said.

Pham said that, ultimately, it is “incumbent upon regulators” to provide clarity for people to know what they can and can’t do within the crypto industry.

Read more: The SEC Is Providing Regulatory Clarity, Just Not How Anyone Wants

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