A Crypto "Sandbox" Won't Make Any Difference

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A Crypto “Sandbox” Won’t Make Any Difference

In the ongoing, maddening mess of U.S. crypto regulation, one idea that continues to attract the attention of intelligent people is a “regulatory sandbox,” which allows selected companies and digital assets to develop experimentally. The premise is that building a kind of “safe space” around an innovative technology or company will allow everyone to learn how new ideas can grow without excessive interference.

This week, Caroline D. Pham, a commissioner of the Commodity Futures Trading Commission (CFTC), delivered an address in which she proposed what she called “the first-ever U.S. pilot program for digital asset markets.” Pham raised the familiar specter of the U.S. falling behind other nations by not supporting or not understanding digital assets. She noted that, in the past, the CFTC created successful pilot programs allowing once-banned trade options to be introduced, and that after the 2010 “flash crash,” the Securities and Exchange Commission (SEC) used a pilot program to implement circuit breakers when there are wild market swings. These historical examples, Pham said, can be tapped to create “a time-limited CFTC pilot program to support the development of compliant digital asset markets and tokenization.”

It’s hard, at first glance, to find any objection to Pham’s proposal.