CFTC commissioner compares cryptocurrencies to lottery tickets.

Investing in crypto assets should be treated as buying lottery tickets, with the potential for both gains and losses. CFTC Commissioner Caroline Pham told CNBC in an interview.

In her view, many creators of crypto projects do not disclose details to investors who buy assets in expectation of “guaranteed profit.”

“You can get rich, or you can lose all your funds,” Pham said.

Pham mentioned collapse of the Terra ecosystem. She called the incident a tragedy for the entire market and a test of its resilience, noting that the collapse of the algorithmic stablecoin TerraUSD (UST) further proves the revival of “shadow” banking.

Pham expressed hope that investors would assess risks more thoroughly before buying such assets. In her view, the crypto market should be subject to traditional financial laws.

“It’s always faster to establish a regulatory base when one already exists. You’re simply talking about expanding the regulatory perimeter around new, original products,” said the Commission spokeswoman.

Pham called for removing ambiguity around “stablecoins”. The commissioner added that Terra’s collapse is enough to push lawmakers to “adopt the right” regulatory framework.

In January, acting Comptroller of the Currency Michael Hsu allowed a “banking panic” scenario among stablecoin holders.

Later, the OCC head said there was a need to bring stablecoin issuers on par with depository institutions with mandatory deposit insurance.

In May, Hsu confirmed the regulator’s careful and prudent approach to cryptocurrencies. He said that the decline in market capitalization after Terra’s collapse did not lead to the “contagion” of traditional banking and finance.

Subscribe to ForkLog news on Telegram: ForkLog Feed — the full news stream, ForkLog — the most important news, infographics and opinions.