Opening Remarks

Good morning and thank you so much for joining today's meeting of the CFTC’s Global Markets Advisory Committee (GMAC). Before we get to today's agenda, I want to take a moment to acknowledge the hard work that you all have put in, and to thank you for tackling some of the most challenging issues in our markets at a time when it seems that Washington may not be making much progress on regulatory clarity for new and emerging technology.

A Pragmatic Approach to Policymaking

Looking back, the GMAC has been particularly active, holding more meetings than any other CFTC advisory committee in the past year, and churning out 13 thoughtful and pragmatic recommendations to date on a wide range of matters, including U.S. Treasury market reform, repo and funding markets, money market funds, collateral management, capital and margin, exchange volatility controls, T+1 securities settlement and FX markets, central counterparty (CCP) resilience, streamlining trade reporting data, and a first-ever U.S. digital asset taxonomy. That's a significant body of work—by far the most of any CFTC advisory committee during the same timeframe ever. And of course, you're not done yet. This doesn't even include the many insightful presentations and discussions that have accompanied these meetings. I also recognize that for every meeting, countless hours are spent to prepare recommendations that ultimately help to inform policymakers and regulators both in the U.S. and across the world. As I've said many times, good policy is hard work, so I'm incredibly grateful that you've generously agreed to share your time, expertise, and resources with the CFTC.

One of the things that's really characterized the GMAC's success is that we've brought together a group of executives with real world practical experience who know how to get things done. Too often, getting things done can seem very challenging in Washington. I think that if this is a sign of what's to come, we have much to look forward to in the future. The GMAC demonstrates the benefits to government when we get together a group of dedicated experts and industry leaders who want to achieve solutions that actually work for our markets to make them better.

When I relaunched the GMAC in 2023, we set out to methodically take on some of the most significant issues facing global markets, and that's exactly what you've done. The GMAC embraced challenging topics, leveraged expertise, engaged in thoughtful debate, conducted transparent and public discussions, and once recommendations were workshopped and refined, it cast public votes. That is how the policymaking process should work.

Both your work product and your work process serve as guiding examples for this agency. It is my hope that the CFTC takes these approaches to heart. Public dialogue and expert input should be at the center of rulemaking efforts, not just an afterthought during a comment period after the ink is dry. A willingness to find common ground on emerging issues is how we stay competitive and innovative in an everchanging world.

This point is especially important when I think back on my own experience implementing Dodd-Frank. It's true that sometimes theory and Washington conventional wisdom don't always translate well to the real world and commercial operations of our market participants. That's why it was so important for me to make sure that in relaunching the GMAC, it was critical to enlist the experience and perspectives of practitioners from every aspect of our markets, from dealers and liquidity providers to asset managers, financial market infrastructures (FMI), service providers, and end users—all leading firms and market innovators in their respective fields.

Your insights help to inform and shape policies, often on issues where the government lacks the practical knowledge or political will to get it right without the help and partnership of the private sector. You all should be very proud of the GMAC’s growing list of achievements. I am incredibly grateful once again for all of your contributions to date, and I know we’ve got even more in the pipeline.

Recommendation on Expanding Use of Non-Cash Collateral Through Use of Distributed Ledger Technology

So, with that in mind, let’s turn to today’s agenda.  I’m very much looking forward to the presentation from the Digital Asset Markets Subcommittee on expanding use of non-cash collateral through use of distributed ledger technology. Leading this presentation will be Allison Parent of GFMA and Thomas Sullivan of Societe Generale. This discussion has already received significant public interest, so I expect this recommendation will garner much attention.

This recommendation builds on the GMAC’s recent record of addressing collateral constraints to help improve liquidity and efficiency. In 2020, under then-Commissioner Dawn Stump’s sponsorship, the GMAC issued an important report  making recommendations on improving the scope and implementation of the margin rules for uncleared swaps, including removing restrictions on eligibility of money market funds that engage in securities lending or repo or reverse repo transactions. The CFTC subsequently proposed and adopted many of the recommendations in that report. For example, in July 2023, the CFTC proposed additional reforms to its uncleared margin rules, including eliminating the restriction on eligible money market funds. I strongly supported these proposed amendments, as well as Commissioner Mersinger. The GMAC’s Technical Issues Subcommittee subsequently recommended finalizing the amendments, which the GMAC advanced at its November 2023 meeting. Unfortunately, the CFTC has yet to finalize this rulemaking.  It’s imperative that the CFTC moves forward with its proposed amendments. These changes are not only common sense, but they also pave the way for greater efficiency that can be unlocked through tokenized money market funds as collateral, as outlined in today’s recommendation.

Presentation and Update from Utility Tokens Workstream

Next, Chris Perkins of CoinFund will provide a presentation on the work to-date by the Utility Tokens workstream of the Digital Asset Markets Subcommittee on defining utility tokens and developing regulatory guidance for market participants. There’s no doubt that innovators and creators are eager to incorporate the benefits of tokenization for not only financial assets, but also for non-financial assets. What is in doubt is whether they’ll receive consistent, predictable treatment from regulators absent a clear foundational understanding of what these emerging assets are and how they can be used for real growth in the real economy and power the digital economy. Without such guidance, innovators seeking to develop the use cases for utility tokens are left to wander around in the dark and hope they don’t inadvertently stumble into an enforcement action.

We need to change that. We need to deliver the needed clarity for digital assets that will empower American innovation with clear rules of the road and provide a path to registration or clear regulatory treatment that also ensures that there are safeguards in place. The CFTC can be a leader in this space, and the GMAC is already blazing the trail for us with its thoughtful workstreams. So, I look forward to an update on the progress on this front.

Conclusion

Finally, I want to again express my gratitude to the GMAC leadership team and all of our members for helping to make today’s meeting possible. Thank you to Amy, Darcy, Sandy and Caroline in particular, as well as Allison, Tom, and Chris. I want to also acknowledge and thank my team: Harry Jung, the GMAC Designated Federal Officer, and Nicholas Elliot, the GMAC Alternate Designated Federal Officer, as well as Taylor Foy and Meghan Tente. Behind the scenes, and together with our talented and exceptional CFTC staff, they’ve been working hard to make sure that the GMAC contributes to policymaking that is transparent, clear, and open to the public. Thank you.

Closing Remarks

The GMAC, with the practical experience of this group of executives and leaders, and the expertise and resources of their teams and firms, has once again shown us what can be accomplished when real world experience and common sense come to Washington and are brought together to develop good policy in an open and transparent manner with meaningful public engagement. I hope the GMAC's successful delivery of 14 recommendations in just over a year serves as a model for execution of policy objectives.

I am looking forward to the future, and I hope that next year, both the CFTC and SEC will act to reinstate the charter for the CFTC-SEC Joint Advisory Committee on Emerging Regulatory Issues, which has been dormant for the past decade. It would be a strong signal of a new U.S. regulatory approach that is collaborative and cooperative.

I also hope that the CFTC will continue to host staff roundtables which will further explore innovation in market structure, some of which has been discussed today—for example, 24/7 trading and the development of new ways to address both the settlement process and settlement assets, which would build upon the recommendation today regarding the tokenization of non-cash collateral.

All over the world, there have been successful and proven commercial use cases for tokenization of assets, such as digital government bond issuances in Europe and Asia, over $1.5 trillion notional volume in institutional repo and payments transactions on enterprise blockchain platforms, and more efficient collateral and treasury management. Now, we can finally begin to make progress on U.S. regulatory clarity for digital assets with today's GMAC recommendation on tokenized non-cash collateral. This marks a significant first step towards realizing these opportunities for our derivatives markets with exactly the same guardrails and protections in place. Embracing new technology does not mean compromising on market integrity.

I'm also excited by the progress of the Utility Tokens workstream and their extensive efforts on a regulatory solution for these key assets, which will help to unleash rapid innovation and growth in the digital economy.

I applaud again the leadership of the GMAC and the Digital Asset Markets Subcommittee and workstreams for promoting the competitiveness of our markets, and of the United States. Thank you again for your time.