Christy Goldsmith, CFTC Commissioner, recently called for more regulation in the crypto market after what happened with FTX.
The recent case involving cryptocurrency exchange FTX has sparked a conversation about the need for proper regulation in the crypto industry. CFTC Commissioner Christy Goldsmith Romero recently appeared on Bloomberg to discuss the impact of the FTX case on crypto regulation. The Commissioner called for a more comprehensive whole-of-government approach to regulating the crypto industry. That is somewhat similar to what is currently in place for traditional finance. This would involve multiple government agencies working together to provide greater customer protection and stronger federal oversight.
The Commissioner also emphasized the need for the CFTC to have more authority over the crypto market. She argued that the CFTC should have more control over the assets that are being listed on exchanges and that they should not be fast-tracked. This would help to ensure that no one is trying to bypass the SEC with their jurisdiction. That way, the market can be protected against manipulation.
Other Emerging Issues
Another concern raised by the Commissioner was the issue of self-certification. Currently, exchanges are able to self-certify products, meaning they determine whether or not a product is appropriate for retail investors. However, the Commissioner pointed out that this can lead to potential issues. Exchanges are inclined to list products that are not suitable for retail investors in order to generate more trading activity.
The Commissioner also raised questions about the accountability of institutional players in the crypto industry. She highlighted that there are serious questions about whether these players fulfilled their fiduciary duties to their clients and what kind of due diligence they conducted. Furthermore, when the CEO of a crypto exchange says in court and in the bankruptcy filings that there is no recordkeeping and no controls (referring to SBF), it raises questions about how this was possible.
That is significantly relevant when looking at the institutional players that had invested in FTX’s growth.
In conclusion, the statements made by the Commissioner indicated that the FTX case has brought to light the importance of proper oversight and regulation, such as CFTC oversight, in the crypto industry. The Commissioner’s call for more stringent regulations and oversight in the crypto industry is a positive step towards ensuring that the crypto market remains safe and fair for investors. A sensible regulatory framework can help the industry grow and evolve in a sustainable manner. But, regulators should refrain from centralizing the industry as it conflicts with the core idea of cryptocurrencies