The chairman of the Commodity Futures Trading Commission has lamented laws that prevent it from working with outside entities on research into areas such as blockchain, warning that the barriers are leaving it years behind regulators in other countries.
In testimony to the US House Committee on Agriculture, Christopher Giancarlo said that the CFTC is hamstrung in its ability to test, demo and generate proof-of-concepts related to emerging technologies.
"Specifically," he explained, "the CFTC lacks the legal authority to partner and collaborate with outside entities engaging directly with fintech and innovation within a research and testing environment, including when the CFTC receives something of value absent a formal procurement."
This means that, for example, the CFTC cannot operate a node on a blockchain operated by banks because the data received would be considered a gift. And, the watchdog could not rent a node without an appropriations bill through Congress.
To illustrate how this is leaving the US behind other countries, Giancarlo cited the recent news that the Bank of England's rebuild of its real-time gross settlement platform will be able to interface with systems running distributed ledgers following proof-of-concept trials with four fintech firms.
The BofE "had the last four years...to participate in all these blockchain beta tests that we have not been able to participate in and they've been able to get comfortable with the technology and now they're incorporating it.
"I feel we're four years behind because we do need to test it, we do need to understand it so we can do a better job as regulator before I then come to Congress and say we need money to build something."
To help address the problem, Giancarlo wants lawmakers to back recently introduced legislation from Congressman Austin Scott that would give the CFTC authority to collaborate on financial and compliance technology, arguing that it would "greatly enhance the Commission’s ability to keep pace with emerging technology, explore its potential, and facilitate its adoption".