A commissioner at the United States Commodity Futures Trading Commission (CFTC) has called on Congress to stop allowing crypto exchanges to “self-certify” and list tokens without oversight.
CFTC Commissioner Christy Goldsmith Romero told an audience at a University of Pennsylvania event on January 18 focused on FTX that the current process was inadequate to ensure proper oversight.saying:
“I urge Congress to avoid allowing newly regulated cryptocurrency exchanges to self-certify products for listing, under the current process that limits CFTC oversight.”
“It is essential to institute guardrails against regulatory arbitrage, and that includes prohibiting the use of the self-certification process,” he added.
Nowadays, Cryptocurrency exchanges can “self-certify” the security of their products before listing them, unless the CFTC blocks listing within 24 hours.
Said This process, used to list products such as crypto futures, is not suitable for that type of asset.
Goldsmith Romero added that Crypto companies seeking to issue tokens could use the CFTC’s cryptocurrency regulatory framework to circumvent Securities and Exchange Commission (SEC) registration.
Proposals to give the CFTC a greater role in oversight of the crypto industry were introduced in Congress in 2022.
Cryptocurrency Gatekeepers Must “Step Up”
During his speech, The commissioner also called on lawyers, compliance professionals, celebrities, venture capital firms and pension fund investors to conduct better research on crypto companies.
“Gatekeepers themselves also need to step up, and demand compliance, controls and other governance, without letting the promise of riches and company marketing talk silence their objections to obvious shortcomings.”
Referring to FTX, which filed for bankruptcy in November after managing and misplacing client funds, Goldsmith Romero said these entities “should have seriously questioned FTX’s operating environment in the run up to its collapse.”
“If the digital asset industry wants to regain public trust, it has a lot of work to do,” he added.
Some cryptocurrency industry observers have continued to argue that the circumstances that led to the collapse of FTX should not be tied to the digital asset space or a lack of regulation.
The managing director of Swiss crypto bank SEBA Hong Kong, Ludovic Shum, told Cointelegraph during an interview this week that the FTX crash could easily have happened in any other industry.
“In the end, it’s about confidence in checks and balances […] It’s been unfortunate that it happened in this fast-growing area of the cryptocurrency world, where it could just as easily have happened to banks, stocks, houses, asset managers,” Shum said.
For his part, Lachlan Feeney, founder and CEO of blockchain development agency Labrys, said the industry needs more oversight, not necessarily regulation, to avoid another disaster.
“The FTX scandal did not happen due to a lack of regulation. FTX operated [supuestamente] illegally, ignoring existing regulations rather than capitalizing on a lack of regulation.”
“There probably should be more oversight to stop unscrupulous players and activities before situations escalate, but we don’t need masses of new regulation and red tape to discourage innovation. We need clarity on existing regulations,” he said. speaking to Cointelegraph.
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