CFTC Authority Over Crypto: Pham Says No New Laws Needed

Pham: Existing Commodity Law Already Reaches Crypto Markets

Former acting CFTC chair Caroline Pham told attendees at TOKEN2049 Singapore that the Commodity Exchange Act (CEA) already provides broad authority for the Commodity Futures Trading Commission to oversee a wide range of crypto activity — without waiting for Congress to pass a wholly new statute. Pham, who now serves as MoonPay’s chief legal officer and chief administrative officer, framed the CFTC’s October 5 advance notice of proposed rulemaking as a practical way to strengthen protections for U.S. retail traders while legislators consider comprehensive digital-asset laws.

Pham’s view follows the agency’s recent discussion draft proposing a federal framework to regulate leveraged, margined and financed retail crypto trading under Section 2(c)(2)(D) of the CEA. The proposals — described as Regulation Crypto Asset Transactions (Regulation CTX) and Regulation Crypto Asset Markets (Regulation CAM) — seek public comment as the CFTC fleshes out detailed rules for a potential federal registration pathway for eligible trading venues.

Why the CEA matters for cryptocurrency oversight

The CEA defines commodities in intentionally broad terms, covering goods, services, rights and financial interests that can be traded through derivatives contracts. Pham stressed that the statute was written to be flexible, enabling the CFTC to respond to novel markets and products that did not exist when the law was enacted. She illustrated this adaptability with hypothetical examples such as derivatives tied to artificial-intelligence computing resources, arguing regulators can apply principle-based supervision to new underlying instruments without waiting for Congress to create bespoke laws for each innovation.

Legal nuance matters: while the CEA’s commodity definition is expansive, the designation of an asset as a commodity does not automatically confer blanket authority over every transaction that touches that asset. The agency’s enforcement and oversight powers differ depending on whether activities involve derivatives, fraud, market manipulation or particular retail leveraged transactions. Pham acknowledged these legal limits but maintained the current framework contains sufficient tools to regulate many aspects of crypto markets now.

Regulation CTX and CAM: A federal option for leveraged retail trading

On October 5 the CFTC issued an advance notice of proposed rulemaking for Regulation CTX and Regulation CAM, signaling its intent to consider detailed obligations for trading venues and market participants that offer certain leveraged and margined retail crypto products. Under the approach laid out by CFTC Chair Michael Selig, eligible crypto businesses could seek federal oversight through a new, registered trading venue or a designated contract market tailored to specific retail services.

Federal registration as an alternative to patchwork rules

Pham praised the initiative, arguing a federal registration option could provide clearer, more consistent protections than the current patchwork of state and federal requirements. The proposed framework aims to set standards for trading platforms, custody, margining and disclosure while creating a federal alternative to state licensing regimes. While Selig acknowledged that some congressional action would be needed to compel all cryptocurrency exchanges to register with the CFTC, he has argued the agency can nonetheless create a voluntary federal registration pathway for businesses offering specified forms of retail crypto trading under existing statute.

The CFTC is seeking public feedback as it develops the detailed rules. If implemented, Regulation CTX/CAM could give retail traders access to regulated venues overseen by the commission and provide clearer guardrails for products that involve leverage, financing or margin.

How commodity status and CFTC powers differ in practice

Pham emphasized that making an asset a commodity under the CEA does not always translate into unlimited oversight. The CFTC’s jurisdiction has historically focused on derivatives markets and on preventing fraud and manipulation. The commission’s authority over spot trading varies depending on statutory text and precedent — hence the significance of the proposed registration option that would explicitly bring certain retail trading activities under a federal scheme.

The official CFTC glossary also reflects this complexity: its commodity definition excludes two curiosities — onions and motion-picture box office receipts — but otherwise remains broad. Pham’s central point was that the agency’s principles-based regulatory approach can adapt to tokenized assets, stablecoins and other innovations without requiring Congress to draft a series of narrowly tailored laws for each new product.

Coordination with other regulators

Pham noted the CFTC’s efforts to coordinate with the Securities and Exchange Commission and other agencies. Her Crypto Sprint initiative in August 2025 sought to implement recommendations from the President’s Working Group on Digital Asset Markets and to harmonize rulemaking priorities between the CFTC and the SEC. The October proposals build on those efforts, including work to permit spot crypto trading on registered CFTC venues and to address around-the-clock markets and perpetual derivatives.

Wholesale settlement: Why tokenized bank deposits matter

Beyond retail rules, Pham turned to the technical challenge of wholesale settlement. She estimated that instant on-chain settlement for a full day’s wholesale obligations could require as much as $15 trillion in immediately available cash — a hypothetical figure that underscores the liquidity demands of gross settlement versus traditional net settlement systems.

Net settlement, liquidity limits and blockchain realities

In traditional finance, banks and institutions use net settlement to offset mutual claims before moving the difference. Converting that model into gross, instant settlement on-chain would substantially increase liquidity needs, Pham argued. To enable blockchain-native settlement that integrates with existing banking relationships, she suggested tokenized bank deposits — commercial bank liabilities recorded as tokens on distributed ledgers — could serve as a pragmatic bridge for wholesale markets.

Tokenized deposits would keep banks in the loop as custodians of customer balances while enabling ledger-based payments and settlement between institutions. Pham described tokenized bank money as “absolutely necessary” for wholesale market infrastructure, since it could operate within familiar banking frameworks and reduce the need for vast amounts of idle cash simply to support instantaneous settlement.

Stablecoins and different use cases

Pham differentiated tokenized bank deposits from stablecoins, arguing both have distinct roles. Stablecoins — particularly those designed for immediate, atomic transfers between counterparties that may not trust each other — are well-suited to payments where simultaneous asset delivery and value transfer are essential. By contrast, tokenized deposits could be the backbone of regulated wholesale settlement, preserving contractual relationships and prudential oversight while leveraging blockchain efficiency.

Her remarks came as MoonPay has expanded institutional services, launching MoonPay Trade to provide institutions with access to blockchains, tokenized assets and settlement rails — infrastructure that aligns with the tokenized deposit vision she described.

Tokenized stocks and market adoption by 2028?

Pham predicted that tokenized shares that embody real shareholder rights — voting, governance participation and economic entitlements — could see meaningful trading activity on major U.S. venues within the next two years. She suggested the New York Stock Exchange and Nasdaq could support “real” tokenized stocks by roughly 2028, assuming regulatory approvals and market development progress on schedule.

Meaningful differences: tokenized shares vs synthetic tokens

Pham was careful to distinguish genuine tokenized securities from synthetic tokens that merely track a stock’s price. True tokenized shares should preserve shareholder rights, she argued, and be structured to avoid conflicts with existing securities laws. The SEC has taken initial steps: in September the commission issued temporary, conditional exemptions allowing some tokenized securities venues to operate under permissioned automated market makers and liquidity pool arrangements, subject to conditions that protect shareholder rights and prevent conflicts with traditional exchange rules.

Exchange partnerships and pilot projects

Pham pointed to cross-industry collaborations as indicators of direction. Nasdaq’s announced investment in Payward (Kraken’s parent) and the Nasdaq Equity Tokens initiative reflect one pathway, targeting availability in 2027 subject to regulatory approvals. Separately, Intercontinental Exchange (parent of the NYSE) and OKX have sought SEC approval for the OKXICE trading platform, proposing tokenized shares for a slate of NYSE-listed names while preserving shareholder rights and offering issuers a chance to object before unaffiliated tokenizations go live.

These pilot projects underscore how established exchanges and crypto firms are attempting to build regulated tokenized stock markets that integrate classical securities protections with ledger-based settlement and distribution.

Regulatory context and next steps for industry feedback

While the CFTC’s rulemaking remains at an initial stage, public engagement will shape its final contours. The SEC has also invited comments on its temporary tokenized stock exemptions and on broader crypto rules: notably, the SEC’s proposed Regulation Crypto Assets carried a public comment deadline listed at October 20, 2026.

Pham’s position follows the Senate’s stall in advancing the CLARITY Act last September, an outcome that left federal agencies to press forward within their existing mandates. The practical effect is a patchwork of agency-led proposals and conditional exemptions that industry participants must navigate while Congress debates comprehensive digital-asset legislation.

What industry stakeholders should consider

Market participants — exchanges, custody providers, institutional traders and tokenization platforms — should monitor both agencies’ rulemaking and prepare to submit feedback. Important issues include: definitions of covered retail activities, market and counterparty protections, custody and segregation requirements, market surveillance, and the legal treatment of tokenized securities and deposits. Technical standards for settlement, interoperability and operational resilience will also be critical if tokenized bank deposits or tokenized stocks are to scale safely.

Conclusions: a pragmatic regulatory path forward

Caroline Pham’s public remarks articulate a pragmatic vision: regulators can and should use existing statutory tools to improve market integrity and consumer protection now, while policymakers deliberate on broader reforms. Her advocacy for tokenized bank deposits for wholesale settlement, a federal registration alternative for certain retail trading venues, and credible tokenized stocks that preserve shareholder rights all aim to combine innovation with established investor safeguards.

Whether the CFTC’s proposals ultimately become binding rules will depend on the outcomes of public comment, interagency coordination and, possibly, future congressional action. For industry stakeholders and crypto market participants, the coming months represent a pivotal period to engage with regulators on the technical, legal and market-design questions that will determine how tokenization, stablecoins and other digital-asset innovations are integrated into mainstream finance.

Pham’s argument — that the CEA already grants the CFTC substantial reach into digital-asset markets — invites market participants to rethink compliance, capital, and product design to align with evolving federal standards. As exchanges, banks and crypto firms pilot tokenized instruments and seek regulatory approval, the balance between innovation and investor protection will shape how digital assets mature within the U.S. financial system.