TRM Labs head of legal: The crypto bill is only the beginning of regulation

Ari Redbord, who’s in charge of legal and government affairs at TRM Labs, told CNBC’s Squawk Box in an interview that the bipartisan crypto bill in the US Senate, unveiled last week, was the “first attempt at a comprehensive legal framework for digital assets.”

New rules for crypto

The bill will establish new rules for cryptocurrencies, transferring the majority of their oversight to the Commodity Futures Trading Commission (CFTC).

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Introduced by Democratic Senator Kirsten Gillibrand and Republican Senator Cynthia Lummis, one of the biggest cryptocurrency advocates, the bill is among the most ambitious efforts yet by legislators to regulate dynamically growing and controversial crypto markets.

Regulations have existed in Europe ‘for some time’

For Redbord, what the bill is really about is giving authority to the CFTC to regulate the space and introducing a more comprehensive regime on digital assets. It is a ‘jump-off point, a proposal to define a clear legal framework.’

Under the new measure, the crypto-friendlier CFTC will play the primary regulatory role instead of the Securities and Exchange Commission (SEC), which typically finds that crypto has to comply with numerous securities requirements.

Squawk Box’s host asked:

Are regulators facing more pressure now to regulate the industry and have probes given? We saw the (UST) stablecoin implosion recently. Do you think there are any questions to the regulators, particularly from some of the investors, asking where their money went?

Redbord replied:

I do. We’ve been talking about crypto regulation for some time. The regulators started to get serious in 2019 with the Libra launch (Facebook’s failed crypto project), ironically enough, a stablecoin project. More urgency around it (emerged) with the collapse of Terra.

He went on to say that UK regulators were the first to ask how to handle a failed stablecoin project. He concluded:

Any stablecoin project should be fully backed. You must have enough of the reserve asset, whether it’s US dollars or euros or gold or any other stable asset…you must have enough of that to support all of the stablecoins you’re issuing.

While the bill is not anticipated to be passed into law in Congress’s current session, its framework could serve as a point of reference for future discussions of how best to oversee crypto markets.