CFTC official: Only five steps are needed to achieve rapid development of blockchain in 2017

Christopher Giancarlo is an official of the Commodity Futures Trading Commission (CFTC). He was appointed by President Obama on August 1, 2013 and sworn in on June 16, 2014.

In this article, Giancarlo argues that the United States should reconsider its blockchain strategy in 2017 and gives detailed reasons.

I have mentioned distributed ledger technology (DLT) several times this year because I believe it can bring significant advantages to financial markets and financial regulators.

Since the 2008 financial crisis, global markets have seen a trend towards decentralized governance, regulation, and capital requirements. DLT can help market participants navigate this high level of operational, transactional, and capital complexity.

For regulators, the transparency of DLT can provide a true record of all financial transactions in the market, thereby creating a complete regulatory framework.

However, in order for the technology to flourish, regulators must work together to develop uniform management standards that encourage DLT investment and innovation.

That’s why I outlined five regulatory steps earlier this year that I outlined specific ways the CFTC and other financial regulators can consider to promote the development of DLT and other financial technologies.

1. Putting the best foot forward: Financial regulators should appoint professional technical teams to work with all fintech companies to address problems with the existing regulatory framework and create favorable conditions for new digital products, services and business models derived from innovative technologies such as DLT.

2. Leave "room for development": Financial regulators should follow the sandbox mechanism of the UK Financial Conduct Authority (FCA) to create a specific regulatory environment for innovative technologies. Regulators should also establish close cooperation with the fintech industry to leave enough room for development so that they have no legal concerns while developing innovative technologies.

3. Direct involvement: Financial regulators should directly participate in financial technology proof-of-concept projects to gain an understanding of technological innovation while improving the efficiency of law enforcement.

4. Listen more and learn more: Financial regulators should establish close ties with fintech innovators to come up with new rules that are conducive to the development of 21st century technologies and business models.

5. Global collaboration: Financial regulators should appoint a task force to help fintech companies address the regulatory and legal issues they encounter across states and at home and abroad.

Global cooperation is particularly important for companies that do business in foreign financial markets. Financial regulators must protect innovative companies from facing difficulties due to differences in regulatory systems across states and at home and abroad.

Because the potential of emerging technologies such as DLT exceeds the limits of regulation, financial regulators must begin to formulate unified rules to avoid hindering the development of innovation.

The CFTC and other U.S. law enforcement agencies lag far behind their counterparts abroad in promoting the development of financial technology.

For example, the FCA has set up an innovation hub, through which fintech companies can develop and launch innovative financial products and services, and test new concepts using the regulatory sandbox mechanism.

Many countries have begun to follow FCA's policies.

The end of each year is the perfect time to reflect on the past and look forward to the future.

The changing regulatory environment in the United States has brought new opportunities for DLT and fintech innovation.

The five points listed above provide an excellent development path. In addition, I promise to do my best to promote DLT and financial technology innovation in the new year, and contribute to the health and development of the US financial and capital markets, market participants and all walks of life in the United States.