CFTC Commissioner: Regulators Can Benefit from Blockchain, If Done Right

CFTC Commissioner Dan Berkovitz said that financial regulators can benefit from blockchain’s open source nature, but need to proceed with caution.


CFTC Commissioner Dan Berkovitz


key takeaways

  • CFTC Commissioner Dan Berkovitz thinks the blockchain is an excellent source of information for financial regulators
  • Decentralization does however pose a threat to the current regulatory framework and consumers will have to step up

Commodity Futures Trading Commission (CFTC) Commissioner Dan Berkovitz thinks blockchain will benefit United States regulatory groups in the long run, he said during a virtual panel hosted by Solidus Labs as part of its Digital Asset Compliance and Market Integrity Summit

“There’s great potential, to the extent that transactions are conducted on an open blockchain, or something to that effect,” he said. “That can greatly help both us and the SEC in our market oversight. If there’s this additional public chain, there’s public analyses of who’s doing what.” 

As much potential as the blockchain has, Berkovitz said, cutting out intermediaries does pose a regulatory threat. 

“Right now, intermediaries in our markets are sort of critical,” Berkovitz said. “The point of regulation really falls most heavily on the intermediaries.” 

The role of the intermediaries

Market intermediaries today, Berkovitz explained, are responsible for operating exchanges and a number of other associated functions. These groups control manipulation and clearing in addition to ensuring trading isn’t disrupted and funds are available. 

“We have licensed entities that are responsible for assuring the integrity of the market, and protecting and safeguarding customer funds, and I believe we have a pretty robust system for doing it. It’s not foolproof. By no means is our system foolproof, but it works pretty well,” he said. 

Unregulated exchanges do not face the same scrutiny from officials and are not performing the same regulatory safeguarding procedures, Berkovitz warned. 

“My concern is that in an unregulated system where nobody’s accountable, the customer is out on their own. That model doesn’t doesn’t work very well,” Berkovitz said. “You’re going to have to have a protocol that addresses the issue, but not all regulation falls on the intermediaries, some of the falls on the market participants themselves.” 

But it’s not just intermediaries that hold regulatory responsibility, Berkovitz said. It’s also consumers, especially in the case of decentralized exchanges. 

“Absent intermediaries, the burden of regulation, of reporting, of record keeping, of ensuring positions aren’t too large, may fall or would fall directly on the market participants,” he said. “It’s not as if you can take the intermediaries out and there’s no regulation, there will still be regulation with the market participants, and they will be left to come up with a regulatory system on their own.”

When asked if he sees the CFTC or Securities and Exchange Commission implementing a market surveillance system in crypto, Berkovitz said different officials will be involved in that discussion. He encouraged all interested parties to reach out to the CFTC with questions or comments. 

“We’re an open agency, so please contact us,” he said. “We are actually here to build markets safely.”


Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2023

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Top Pic.jpeg


Avalanche has introduced proposal ACP-77, which would drastically lower the barrier to entry to launch a dedicated blockchain, while imposing a continuous fee mechanism that subnets would pay to the P-Chain. By performing a scenario analysis of different dedicated blockchain solutions, we conclude that ACP77 would hypothetically make Avalanche subnets as cost-effective as Celestia-based rollups while providing additional liveness guarantees and native interoperability.


Plus, May’s jobs report from the Bureau of Labor Statistics is going to be a big one


Plus, it’s time to finally address the Iggy Azalea in the room


There will be no altcoin season until we get ETFs for all the dog coins


Bitcoin miner is in discussions with other potential clients as it plans to use another 300 MW of capacity to support high-performance computing


Plus, Robinhood announced that it entered into an agreement to acquire Bitstamp, one of Europe’s largest and longest-serving crypto exchanges


Whether you decide to invest in bitcoin should be up to you, not the SEC or Gary Gensler