One of the commissioners of the US Commodity Futures Trading Commission, J. Christopher Giancarlo, stated on Tuesday that regulators should accept technologies like the blockchain and not stifle innovation.

At a meeting of the CFTC’s Technology Advisory Committee, Giancarlo said the following:

“In a recent CFTC podcast, I spoke about the potential benefits to market structure from the application of distributed open ledgers. I said that distributed ledgers will have enormous implications for financial markets in payments, banking, securities settlement, title recording, cyber security and the process of collateral management. Open ledgers may also make possible new “smart” securities and derivatives that will revolutionize operational and transactional efficiency. They may help reduce some of the enormous cost of the increased financial system infrastructure required by new laws and regulations, including Dodd-Frank.

Enormous resources are being invested in developing the distributed open ledger known as the blockchain. Regulators must cultivate and embrace new technology such as the blockchain and not stifle innovation. I am pleased that the TAC will be discussing the blockchain and I hope that it will continue to advise the CFTC on new disruptive technologies.”

The other CFTC Commissioner, Sharon Bower, was a bit more guarded in her statement at the TAC meeting. Although identifying the potential of distributed ledger technology, Bowen recommended developing an understanding of the technology first before adopting it for markets across the board.

“This technology, even more nascent than algorithmic trading, carries with it tremendous potential for electronic trading and electronic commerce more broadly. Yet, before we can make use of this technology, we need to understand it. Not one, from industry to regulators to consumers, is served if we run head-long toward adopting a new technology that we all do not understand. I therefore hope that today’s discussion on the blockchain’s ledger technology, its public data file of all the transactions, can be safely distributed to the derivatives markets.”

The CFTC’s Chairman and political appointee, Timothy Massad, told the TAC Meeting that he hoped the discussion on blockchain technology would cover “specifics” and avoid the “hype” of its potential application to the derivatives market.

The only TAC member that is involved in a blockchain technology-oriented venture is Paul Chou, LedgerX’s CEO and co-founder. LedgerX is an institutional trading and clearing platform that is awaiting regulatory approval from the CFTC to trade and clear options on  bitcoin. Another member of the committee, TABB Group CEO Larry Tabb, has produced research on the suitability of distributed ledger technologies for equities and derivatives markets.