CFTC commissioner compares investing in cryptocurrencies to buying lottery tickets

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After the collapse of the Terra project, US Commodity Futures Trading Commission Commissioner Caroline Pham compared investing in digital assets to buying lottery tickets.

In an interview on CNBC, the Commissioner of the CommissionUS Commodity Futures Trading Authority (CFTC) Caroline Pham said that the organizers of most cryptocurrency projects do not disclose detailed information to investors buying crypto assets in the hope of making a “guaranteed profit.” Pham mentioned the sensational Terra project, which, according to her, was not only a tragedy for the entire market, but also a test of its strength. The collapse of UST once again proves the revival of “shadow” banking, when financial transactions are carried out with the participation of intermediaries whose activities are not regulated by anyone. Pham hopes that investors will evaluate the risks more carefully before investing in such assets.

“Crypto assets should be treated asbuying lottery tickets, from which you can expect both winning and losing. You can get rich, or you can lose all your money,” Pham said.

The United States is already taking the firststeps to develop regulation of digital assets and stablecoins. Wyoming Senator Cynthia Lummis is actively working to create legislation that will both promote the development of the cryptocurrency industry and protect the rights of investors. However, Pham believes that the cryptocurrency market should be subject to the laws of traditional finance. According to her, it is much faster and easier to expand the existing regulatory framework for innovative products, including crypto-assets, than to create it “from scratch.”

Stablecoin regulation has been controversialamong lawmakers even before the collapse of Terra - many regulators call them a threat to the global financial system. For example, the managing director of the International Monetary Fund (IMF), Kristalina Georgieva, compared stablecoins, which are not backed by real assets, to financial pyramids.

Pham believes that it is necessary as soon as possibleclear up the ambiguity surrounding stablecoins and determine whether regular and algorithmic stablecoins can be considered financial derivatives. The collapse of the Terra ecosystem should be more than enough for lawmakers to pass the right laws, the CFTC commissioner concluded, citing the Dodd Frank Wall Street Reform and Consumer Protection Act. It was adopted in 2010 to reduce risks in the financial system after the 2008-2009 crisis.

This month, CFTC Chairman Rostin Banham(Rostin Behnam) said that the agency will tighten regulation of digital assets due to an increase in cases of fraud and market manipulation with cryptocurrencies.