After the Terra token crash, Commodity Futures Trading Commission (CFTC) Commissioner Caroline Pham called on investors to view the crypto token as a lottery where profits or losses can be expected. In an interview with CNBC, Pham emphasized that most crypto projects lack customer disclosure and investors end up buying, believing they are guaranteed to get rich. Frankly, if people start thinking of some of these really novel crypto tokens as lottery tickets. When you go to the lottery, you might make a fortune and get rich soon, but chances are you won’t.
According to Pham, the Terra coin crash was a tragedy for the market and a reality check for the relevant stakeholders, especially for the risky nature of certain assets. The Commissioner believes that the UST crash is a pointer to action by regulators, as the crash suggests a possible re-emergence of shadow banking and financial activity with unregulated intermediaries or without regulation.
While the U.S. has taken initial steps to regulate digital currencies, primarily stablecoins, Pham noted that regulators could extend existing traditional financial laws to the crypto market. It’s always faster to build a regulatory framework when it already exists, you’re just talking about expanding the regulatory spectrum around newer, novel products.
