Caroline Pham: CFTC Jurisdiction Covers Crypto Without Congress

Former CFTC Acting Chair Caroline Pham has a blunt message for anyone waiting on Congress before taking crypto compliance seriously: the Commodity Exchange Act already gives the agency authority over nearly every asset class, and the regulator is not standing still. Speaking at Token2049 Singapore, Pham, now chief legal officer and chief administrative officer at MoonPay, told The Block that the CEA's drafting is broad enough to cover "pretty much everything" except onions and movie box office receipts. For US accounting firms, auditors, and CFOs managing digital asset exposure, that framing has direct consequences for how compliance frameworks, risk classifications, and crypto bookkeeping software configurations need to be structured right now.

The Commodity Exchange Act Is Already Wide Enough

Pham's core argument is that the CEA was written to be principles-based and flexible, deliberately designed to anticipate new commodity types rather than enumerate them. She cited AI compute markets and derivatives on AI compute as a current example of assets the CFTC's framework can absorb without a statutory rewrite.

Why the Clarity Act failure changes the calculus

The Clarity Act, which had sought to draw bright legislative lines between SEC and CFTC jurisdiction over digital assets, failed last month. That outcome has pushed many in the industry toward a dual track: continuing to lobby for legislation while also engaging directly with agency rulemaking. Pham's position is that the second track is not a fallback, it is sufficient on its own. The CEA's commodity definition is expansive enough that the CFTC can move on crypto markets, leveraged retail products, tokenized assets, and emerging derivative classes without waiting for Capitol Hill.

For compliance teams, this is not an abstract legal debate. If the CFTC proceeds through rulemaking rather than statute, the resulting obligations arrive faster, with less political negotiation, and potentially with less grandfathering. Firms that have been treating legislative uncertainty as a reason to defer digital asset accounting upgrades face a shrinking window.

Our earlier analysis of what the CFTC swap definition battle means for crypto firms covered the jurisdictional tensions that made the Clarity Act necessary in the first place; Pham's remarks suggest those tensions are now being resolved through regulatory action rather than legislation.

Leveraged Retail Crypto: The Dodd-Frank Thread

One of the most immediately practical points Pham made concerns leveraged retail crypto transactions. She described the CFTC's current proposed rulemaking in this area as a direct continuation of her own Crypto Sprint initiative, which she launched in 2025. That initiative drew on a 2010 Dodd-Frank provision requiring leveraged, margined, or financed retail commodity transactions to occur on a regulated exchange, a requirement the CFTC had not enforced for years.

What the proposed federal framework would require

Under the approach now being advanced by the CFTC under Chairman Michael Selig, the agency would create a federal framework for leveraged retail crypto transactions as an alternative to the existing patchwork of state licenses. Pham described this as "absolutely the kind of protection" that retail traders need, and contrasted it favorably with leaving activity subject to inconsistent state-level rules.

For accounting firms and CFOs with clients offering or using leveraged crypto products, the practical implications are significant. A federal exchange-based framework would standardise reporting requirements, margin calculations, and transaction records in ways that state-by-state licensing never could. Digital asset accounting software configurations that currently handle leveraged positions inconsistently across jurisdictions would need to be rationalised. Audit trails for margined crypto trades would need to meet a single federal standard rather than fifty different ones.

Tokenized Deposits vs. Stablecoins: A Structural Distinction

Pham made a pointed argument about the limits of stablecoins in wholesale markets, one that carries direct accounting implications. She noted that atomic settlement of a single trading day would require approximately $15 trillion in cash to change hands simultaneously. That level of liquidity does not exist. Banks currently manage settlement volumes through net settlement, where counterparties offset obligations and only the residual amount moves.

Why tokenized deposits fit wholesale and stablecoins fit retail

In that context, Pham argued that tokenized deposits are "absolutely necessary" for wholesale markets, while stablecoins remain better suited to transactions where counterparties do not have an established trust relationship, or where eliminating settlement risk requires simultaneous delivery of asset and cash.

This distinction matters for how firms classify and record these instruments. Tokenized deposits issued by a regulated bank carry a different risk profile, a different counterparty structure, and almost certainly a different accounting treatment than a stablecoin issued by a non-bank entity. Under current US GAAP, the appropriate classification of digital assets held for settlement purposes is an area of active discussion. Firms that have been treating all dollar-pegged digital assets as functionally equivalent in their books need to revisit that assumption as the regulatory framework becomes more differentiated.

The broader context for stablecoin accounting obligations is covered in our piece on GENIUS Act stablecoin compliance for banks, which remains relevant as the CFTC's wholesale market framework develops in parallel.

Tokenized Equities: A Two-Year Window

Pham expects the New York Stock Exchange and Nasdaq to list tokenized shares of actual companies, with real trading volume, within two years. She tied this to the SEC's innovation exemption, which she described as a regulated pathway for listed stocks to appear on tokenized securities venues inside an SEC regulatory framework.

Real securities vs. synthetic tokens

Pham drew a clear line between genuine tokenized equities, instruments that carry actual shareholder rights including voting and governance participation, and synthetic tokens that the underlying issuer has not approved. The distinction is not merely semantic. A tokenized share of a Nasdaq-listed company that confers voting rights at annual meetings is a security in both the traditional and tokenized sense. A synthetic token that tracks the price of that share without issuer involvement occupies a very different legal and accounting position.

For firms building or auditing portfolios that include either type, the classification question is urgent. Genuine tokenized equities would likely be recorded and taxed as equity investments, with mark-to-market treatment depending on the entity type and holding intent. Synthetic tokens could fall under the commodity framework Pham describes, with derivative accounting treatment applying instead. Crypto bookkeeping software that does not yet distinguish between these categories will produce materially inaccurate financial statements once trading volumes arrive at the scale Pham anticipates.

For context on the current state of tokenized equity markets, see our coverage of tokenized stocks: volatile, illiquid, and in demand.

NFTs as Loyalty Instruments, Not Securities

Pham expects a second wave of NFT activity once regulatory clarity improves, but she framed NFTs primarily as customer engagement tools rather than securities. She compared them to loyalty programmes, such as airline miles or coffee chain points, and argued that prior enforcement actions by the previous administration had suppressed activity that was not equivalent to equity ownership.

Accounting implications for NFT-based programmes

If NFTs are ultimately treated as loyalty instruments rather than securities, the accounting treatment shifts accordingly. Loyalty liabilities are recognised differently from investment contracts. Firms running NFT-based customer programmes, or auditing clients who do, should document the specific rights conferred by each NFT series and assess whether those rights more closely resemble a redeemable loyalty credit or an ownership stake. The answer determines whether the liability sits on the balance sheet as a deferred revenue item or as a financial instrument. Getting this wrong now, before CFTC and SEC guidance solidifies, creates restatement risk later.

What This Means for Firms Using Digital Asset Accounting Software

Pham's remarks, taken together, sketch a near-term regulatory landscape in which the CFTC acts through rulemaking across a wider range of digital asset classes than most compliance teams have planned for. Several practical priorities follow from that picture.

Classification and chart-of-accounts structure

Firms need a chart of accounts that can distinguish between stablecoins, tokenized deposits, genuine tokenized equities, synthetic tokens, and NFT-based loyalty instruments. Each category carries different accounting treatment, different disclosure requirements, and potentially different CFTC or SEC oversight. Digital asset accounting software that uses a single "crypto asset" bucket is no longer fit for purpose in a market moving toward these distinctions.

Leveraged position reporting

If the CFTC's proposed federal framework for leveraged retail crypto transactions advances, firms and their clients will need audit-ready records of margin positions, liquidation events, and realised gains and losses on leveraged trades. The standard for those records will be set by CFTC rules, not state law. Now is the time to audit existing data capture processes against that likely standard.

Wholesale settlement accounting

The tokenized deposit argument Pham makes implies that large institutions settling trades via blockchain will increasingly use bank-issued tokenized liabilities rather than stablecoins. The accounting for those instruments, including intraday exposure, netting arrangements, and credit risk on the issuing bank, needs to be embedded in treasury and settlement workflows before volumes scale.

Frequently Asked Questions

Does the CFTC's existing authority actually cover Bitcoin and Ether without new legislation?

Based on Pham's reading of the Commodity Exchange Act, yes. The CEA's commodity definition has been interpreted to include both Bitcoin and Ether in prior CFTC enforcement actions and proposed rules. Pham's argument is that this authority extends broadly across digital asset classes without requiring a new statute.

How does the distinction between tokenized deposits and stablecoins affect our balance sheet?

Tokenized deposits are liabilities of a regulated bank, making them closer in accounting treatment to a cash equivalent held at a financial institution. Stablecoins issued by non-bank entities are currently classified as intangible assets under most interpretations of US GAAP. Mixing the two in a single line item overstates or understates liquidity depending on which instrument dominates. Separate classification is the appropriate approach.

If tokenized NYSE or Nasdaq shares arrive within two years, how should we account for them?

Tokenized shares that confer full shareholder rights, including voting, dividends, and governance participation, should be accounted for as equity investments under the same framework as their traditional equivalents. The tokenized wrapper does not change the economic substance. Synthetic versions that merely track price without issuer approval may require derivative or commodity accounting treatment instead.

What triggers a CFTC reporting obligation for a leveraged crypto trade?

The Dodd-Frank provision Pham references covers leveraged, margined, or financed retail commodity transactions. If the CFTC's proposed rulemaking advances, the trigger is likely to be any retail transaction involving crypto as a commodity where the counterparty provides margin or financing. Firms should monitor the final rule text closely, as the precise threshold and counterparty definitions will determine scope.

Does the NFT loyalty instrument framing reduce tax exposure for firms running NFT programmes?

Not automatically. The tax treatment of NFTs issued as loyalty instruments depends on the specific rights they confer and how they are redeemed, not on a regulatory label. If an NFT is redeemable for goods or services, it may generate deferred revenue for the issuer and ordinary income for the holder on redemption. If it conveys an ownership or profit-sharing interest, it may be treated as a security for tax purposes regardless of what the issuer calls it. Legal and tax counsel should review each programme's terms independently.

Source: The Block