- CFTC Commissioner Christopher Giancarlo believes that the current period of innovation makes it challenging to approve proposals like Bakkt.
- He is a firm believer in cryptocurrencies and believes that it could’ve prevented the 2008 financial collapse.
Even though the US Commodity Futures Trading Commission (CFTC) has stalled the approval of Bakkt, commissioner Christopher Giancarlo remains hugely bullish on cryptocurrencies and blockchain technology, calling them “exponential.” Known affectionately in the community as “Crypto Dad” for his pro-crypto stance, Giancarlo believes that the reason why Bakkt has been stalled is because we are in a new phase of innovation which has three distinct characteristics that make it different from all other previous phases. These difference require “a new, differentiated regulatory response.”
The three characteristics as detailed by Giancarlo are as follows:
- The first is that we live in a period of exponential technological change. That is, the sheer speed of innovation has increased exponentially, both in terms of production of new models and products and their subsequent public adoption.
- The second characteristic is the disintermediation of traditional actors or business models, which can challenge regulators and existing regulatory frameworks.
- The third characteristic is that the pace and nature of technology-driven innovation require heightened technological literacy across leaders in business and government.
Giancarlo is a firm believer in cryptocurrencies and believes that it could’ve prevented the 2008 financial collapse:
“Today I want to take stock of the current state of blockchain technology and renew a focus on how it can impact – and improve – our markets. To begin, I want to take you back for a moment to September 2008. That was a perilous time in global financial markets. An enormous US housing bubble had burst triggering a cascading global credit crisis. Concern was rife about imminent investment and commercial bank failure.
I was on Wall Street, serving as a senior executive of one of the world’s major trading platforms for credit default swaps (CDS), then the epicenter of systemic risk. Panic was in the air and tension was on our broking floor trying to maintain orderly markets. I remember a call from a U.S. bank regulator asking about CDS trading exposure of several major banks, including Lehman Brothers. In fact, trading conditions were deteriorating by the hour. It was clear that the regulator had little means, short of telephone calls, to read all the danger signals that the CDS markets were broadcasting.
But imagine what a difference it would have made a decade ago on the eve of the financial crisis if regulators had access to the real-time trading ledgers of large Wall Street banks, rather than trying to assemble piecemeal data to recreate complex, individual trading portfolios.”