A commissioner at the Commodity Futures Trading Commission (CTFC) is weighing in on the risks associated with buying cryptocurrencies after Terra (LUNA) and its algorithmic stablecoin TerraUSD (UST) collapsed last month.<\/p>\n
In an interview with CNBC, Caroline Pham tells<\/a> host MacKenzie Sigalos that the LUNA and UST implosions were an important wake-up call for people who buy into crypto thinking it\u2019s the path to easy money.<\/p>\n \u201cWhen everything is going great, when the price keeps going up and everybody feels like they\u2019re winning, then people are not aware of the risks.<\/em><\/p>\n I think that this happened, and it was a tragedy that it happened, but I think it also really was a reality check in showing just how risky some of these products can be, that they\u2019re not guaranteed.\u201d<\/em><\/p>\n Pham goes on to compare investing in newer digital assets to playing the lottery, while also indicating a desire to see more consumer protections put in place.<\/p>\n \u201cI think if people started to think about some of these really novel crypto tokens as, frankly, lottery tickets\u2026 When you go and you buy a lottery ticket, you might strike it big and get rich quick, but you might not. But when people buy a lottery ticket, they don\u2019t expect to win.<\/em><\/p>\n I think what I\u2019m worried about is, without appropriate protections in place and the right disclosures, that people are buying some of these crypto tokens thinking they\u2019re guaranteed to strike it rich.\u201d<\/em><\/p>\n Commissioner Pham next points out that the CFTC first identified Bitcoin<\/a> (BTC) as a commodity seven years ago, and says both Ethereum<\/a> (ETH) and Litecoin<\/a> (LTC) also fall under that umbrella.<\/p>\n \u201cThe CFTC first said that Bitcoin is a commodity back in, I think, 2015. It\u2019s great that [U.S. Securities and Exchange Commission] Chairman [Gary] Gensler agrees with us.<\/em><\/p>\n The CFTC has over the years identified specific cryptocurrencies that are commodities. There\u2019s Bitcoin, there\u2019s Ethereum. There\u2019s also Litecoin, we\u2019ve identified that in one of our enforcement actions as a commodity.<\/em><\/p>\n I think what\u2019s important to realize about the CFTC\u2019s jurisdiction is that, of course, the SEC regulates securities, but for everything that\u2019s not a security, it\u2019s probably likely that the CFTC has some regulatory touch-point over it.\u201d<\/em><\/p>\n The commissioner also recently said<\/a> immediate regulatory actions are needed to safeguard crypto traders from incurring the types of losses they did when LUNA and UST disintegrated to the tune of around $40 billion.<\/p>\n<\/p>\n I<\/span>
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