Former Acting Chair Caroline Pham says CFTC can regulate almost everything except ‘onions and box office receipts’

We have spent years watching the regulatory tug-of-war between the SEC and the CFTC. For builders, this isn't just a legal debate; it is a question of whether your project is treated like a stock or a commodity. Caroline Pham, the former acting chair of the Commodity Futures Trading Commission, recently laid out a vision that should make every founder stop and pay attention. Her stance is clear: the CFTC has the mandate to regulate almost everything under the sun, provided it isn't an onion or a movie ticket.

The Onion Exception

To understand where crypto sits in the eyes of the CFTC, you have to look at the weird history of American regulation. Pham pointed out that the agency's reach is vast, covering nearly all goods and articles. The specific exclusions for onions and box office receipts are historical quirks, not the standard. This tells us something vital about the CFTC's self-image. They don't see themselves as a niche regulator for corn and oil; they see themselves as the rightful guardians of any tradeable asset that doesn't fit the strict definition of a security.

For those building in the space, this perspective is actually quite refreshing. Instead of trying to squeeze a decentralized protocol into a 1946 Supreme Court ruling about orange groves, the CFTC operates on a framework designed for things that are actually used and traded. Pham's argument is that the CFTC is already equipped to handle the complexities of digital assets, provided we stop pretending they are all just unregistered shares in a company.

Retail Protection Without the Bloat

One of the biggest hurdles for crypto founders in the U.S. has been the lack of a clear path to serving retail customers legally. Pham suggests that the CFTC's recent proposals are exactly what is needed to bridge this gap. She frames these rules as essential protections for the average trader. From a founder's perspective, this is a double-edged sword. On one hand, more rules mean more compliance costs. On the other hand, it provides a legitimate shield against the constant threat of enforcement actions.

We have seen what happens when regulation is done via litigation. It creates a vacuum where only the biggest players with the deepest pockets can survive. Pham is pushing for a more proactive approach. She believes the CFTC can provide the guardrails that retail traders deserve without stifling the underlying technology. If she is right, we might finally see a regulatory framework that prioritizes transparency and risk management over trying to shut down every project that issues a token.

Why This Matters for Founders

If you are building a DeFi protocol or a new Layer 1, you need to understand that the CFTC is positioning itself as the 'friendly' alternative to the SEC. But don't mistake friendliness for a lack of oversight. The CFTC is a serious regulator with teeth. Their focus is on market integrity and preventing manipulation. If your token is treated as a commodity, you aren't off the hook; you just have a different set of homework to do.

Pham's comments suggest a future where crypto projects are regulated based on how they are traded rather than how they were funded. This is a massive win for builders who are focused on utility. If you are creating a token that has actual use within an ecosystem, the commodity label is much more fitting than the security label. It allows for a more fluid market and less friction for the end-user.

The Skeptic's Corner

Now, let's look at this with a bit of skepticism. Every regulator wants more territory. By claiming they can regulate everything except onions, the CFTC is effectively planting a flag in the entire digital economy. While this might be better than the SEC's approach, it still means more government eyes on your code. We also have to consider the political reality. A change in leadership or a new bill in Congress could shift this balance in an instant.

Founders should also be wary of the 'retail protection' narrative. Often, these protections end up being barriers to entry that favor incumbents. If the CFTC's rules for crypto retail traders are too burdensome, we will just see more innovation moving offshore. Pham is optimistic that the balance can be struck, but for those of us in the trenches, the proof will be in the actual implementation of these rules.

The Path Forward

What should you do right now? First, stop ignoring the CFTC. For a long time, the SEC was the only name in the news, but the tide is shifting. If your project involves derivatives, leverage, or any kind of tradeable asset that isn't clearly a security, the CFTC is your new best friend (or your new biggest headache). You need to be looking at their proposed rules and understanding how they apply to your liquidity pools and trading mechanics.

Second, lean into the commodity narrative where it makes sense. If your token has a clear use case and isn't just a vehicle for speculation on your company's success, you have a strong argument for CFTC oversight. This requires honesty about what you are building. You can't have it both ways; you can't claim to be a commodity while acting like a tech stock.

The Takeaway

The CFTC is ready to take the wheel. Caroline Pham's comments reinforce the idea that the agency sees crypto as a natural extension of its existing mandate. For builders, this is an opportunity to move toward a more stable regulatory environment. The era of 'regulating by enforcement' might be coming to an end, replaced by a more structured, albeit complex, commodity-based framework.

Keep your eyes on the CFTC's rule-making process. The difference between a thriving ecosystem and a dead one often comes down to the fine print in a regulator's handbook. Unless you're selling onions, you're in their world now.

Read the original at The Block →