Blockchain Could Have Transformed Regulators’ Real-Time Response to 2008 Crash: CFTC Chairman

Christopher Giancarlo, a chairman of the United States Commodity Futures Trading Commission (CFTC), is making the headlines on our DC Forecasts Bitcoin news site with a new statement that says that blockchain would have transformed the regulators real-time responses to the 2008 global financial crash – if it was used at the time.

Giancarlo spoke during the 4th Annual DC Blockchain Summit in Washington DC on March 6th,  where he drew on his personal experiences as an executive vice president at the brokerage giant GFI Group. As he noted, in 2008, GFI operated one of the world’s largest trading platforms for credit default swaps (CFS), naming it “the epicenter of systemic risk.”

He also recalled the panic and disorder on the GFI broker floor as the global credit crisis went out of control, stating:

“I remember a call from a U.S. bank regulator asking about CDS trading exposure of several major banks, including Lehman Brothers. In fact, trading conditions were deteriorating by the hour. It was clear that the regulator had little means, short of telephone calls, to read all the danger signals that the CDS markets were broadcasting.”

According to Giancarlo, blockchain technology “would have provided a golden record of the real-time ledgers of all regulated trading participants,” but would also prevent the convoluted fashion in which regulators struggled to maintain orderly markets at the peak of their systemic failure.

“What a difference it would have made a decade ago if blockchain technology had been the informational foundation of Wall Street’s derivatives exposures. At a minimum, it would certainly have allowed for far prompter, better-informed, and more calibrated regulatory intervention instead of the disorganized response that unfortunately ensued,” Giancarlo concluded.