Christy Goldsmith Romero, the commissioner, wants crypto exchanges to be barred from self-certifying crypto and crypto products before they go live on their platforms.
A Commodity Futures Trading Commission (CFTC) commissioner has urged Congress to prohibit cryptocurrency exchanges from “self-certifying” and listing tokens without monitoring.
Christy Goldsmith Romero, commissioner of the Commodity Futures Trading Commission, addressed an audience at a University of Pennsylvania FTX event on January 18 that the current method was insufficient to assure proper oversight, saying:
“I urge Congress to avoid permitting newly-regulated crypto exchanges to self-certify products for listing, under the current process that limits CFTC oversight.”
“It is necessary to erect barriers to regulatory arbitrage, including limiting the use of the self-certification procedure,” she noted.
Currently, cryptocurrency exchanges can “self-certify” the safety of their products before listing them, unless the CFTC blocks the listing within 24 hours.
She claims that the method utilised to list products like crypto futures is insufficient for that type of asset.
Goldsmith Romero went on to say that crypto companies intending to issue tokens might use the CFTC’s crypto regulatory framework to avoid SEC registration (SEC).
Proposals to strengthen the CFTC’s role in overseeing the crypto business were proposed to Congress in 2022.
During her remarks, the commissioner also urged lawyers, compliance professionals, celebrities, venture capital firms, and pension fund investors to perform more thorough due diligence on cryptocurrency companies.
“Gatekeepers themselves also need to step up, and call for compliance, controls, and other governance, without allowing the promise of riches and the company’s marketing pitch to silence their objections to obvious deficiencies.”
Goldsmith Romero stated of FTX, which declared bankruptcy in November after mishandling and misplacing customer funds, that these entities “should have carefully questioned the operating environment at FTX in the lead-up to its catastrophe.”
“The digital asset market has some work to do if it wants to reclaim any kind of public trust,” she added.
Some crypto industry analysts have maintained that the circumstances behind FTX’s demise should not be attributed to the digital asset ecosystem or a lack of regulation.
Ludovic Shum, managing director of SEBA Hong Kong, told Cointelegraph this week that the decline of FTX could have happened in any other business.
“At the end of the day, it comes down to trust in the checks and balances […]” It was really sad that it happened in this rapidly emerging part of the crypto world, where it could easily have happened to banks, stocks, houses, and asset managers,” Shum added.
Meanwhile, Lachlan Feeney, founder and CEO of blockchain development firm Labrys, believes the industry requires greater monitoring, rather than regulation, to avoid another calamity.
“The FTX scandal didn’t happen because of a lack of regulation. FTX operated [allegedly] illegally; disregarding the existing regulations rather than capitalizing on an absence of regulation.”
“There should undoubtedly be greater oversight to avoid dishonest players and activities before things escalate, but we don’t need heaps of new regulation and red tape that deters innovation. “We need clarity on the present regulations,” he told Cointelegraph in a statement.
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