In a framework published in the Harvard Business Law Review on June 15, Heath Tarbert, Chairman of the Commodity Futures Trading Commission, made a strong case for financial regulation based on broader principles than specific rules.
The principle argument
The argument in favour of the principles is that the approach involves less bureaucracy and, at best, encourages innovation. Tarbert expressed his desire to see the Bitcoin Rush „stay ahead of the curve by reacting more quickly to changes in technology and the marketplace.
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Tarbert wrote that in addition to promoting flexibility and innovation, „Principled regulation also discourages ‚gap‘ behavior and ‚checklist‘ style approaches to enforcement.
The role of crypto and new technology in Tarbert’s vision
Tarbert’s argument cited the digital marketplace and cryptomonies in particular are areas where his preferred style of regulation would be especially valuable:
„Another area where principles-based regulation is generally appropriate is with respect to developments in financial technology (fintech), including the block chain and digital assets… In my view, the United States should lead the world in this technology, and overly prescriptive rules could slow down the development of this important market.
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Having become President of the CFTC only a year ago, Tarbert is known for his support of crypto space and has made the principled argument before.