WASHINGTON, D.C.—Benjamin Schiffrin, Director of Securities Policy for Better Markets, issued the following statement in connection with the launch by the Commodity Futures Trading Commission (CFTC) of a digital asset pilot program for tokenized collateral:

“Acting Chair Pham has not officially confirmed the reports that she will join crypto company MoonPay as chief legal officer and chief administrative officer when she leaves the CFTC – and the CFTC’s nonanswer when asked suggests she will – but regardless she is already acting as if she is part of the crypto industry. Less than two weeks after the comment period closed on the CFTC’s request for feedback on tokenized collateral, the CFTC has announced a pilot program that will allow the use of crypto as collateral in derivatives markets. Even more disturbing than the timing of the launch of the program is the fact that the CFTC’s press release announcing it quotes numerous crypto companies applauding the action, as if they were part of the agency that took the action in their favor.

“Our comment letter on tokenized collateral highlighted the risks of allowing stablecoins as collateral. The fact that so-called stablecoins are so often unstable makes them unsuitable for collateral where the CFTC has recognized that collateral should be able to maintain its value during times of stress. Stablecoins do not fit into this category of assets. The risks are even greater with respect to cryptocurrencies such as bitcoin and ether, which are highly volatile assets even in normal times. As a result, the CFTC’s action may be a boon to the crypto industry but is likely to endanger the investors that the CFTC is supposed to protect.”

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Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.org.