CFTC Commissioner Christy Goldsmith Romero has highlighted the urgent need to modernize investor protection measures using cutting-edge technology. She warned that failing to do so would negatively impact American investors, particularly the most vulnerable ones.
Speaking at the North American Securities Administrators Association’s (NASAA) annual meeting, Romero highlighted the importance of regulators understanding emerging technologies’ implications for finance and the law.
Romero has taken proactive steps by appointing technology experts in areas such as FinTech, responsible artificial intelligence, cryptocurrency, blockchain, and cybersecurity to the CFTC’s Technology Advisory Committee (TAC). The TAC’s primary objectives include finding ways to merge Know Your Customer (KYC) and Anti-Money Laundering (AML) processes into decentralized finance and crypto investments.
Furthermore, the TAC is dedicated to promoting the responsible development of artificial intelligence within the regulatory sphere. Romero highlighted that federal regulators are still in the early stages of incorporating AI and underlined the need for governance in making crucial decisions that impact investors and markets.
In response to the evolving landscape of crypto investigations, Romero recommended a shift from merely tracking trade activities to monitoring social media platforms like X (formerly Twitter), Reddit, and Facebook. She emphasized the importance of providing regulators with advanced tools, including blockchain analysis, link analysis, social media monitoring, and data analytics, to aid investigations.
Romero pointed out that the statements shared on social media platforms can serve as significant evidence of intent, making them valuable resources for regulators in protecting investors and issuing scam warnings.
To combat financial fraud effectively, Romero proposed the establishment of a National Financial Fraud Registry, a centralized repository documenting all crimes and fines related to financial fraud. This registry would empower investors to conduct background checks for ongoing investigations or fines imposed on companies, serving as a powerful deterrent against fraud.
Romero has consistently advocated for crypto companies to verify users’ digital identities as a means to reduce anonymity while preserving financial privacy. Her call extends to both traditional exchanges and decentralized finance (DeFi) platforms.
It has been observed that the CFTC always takes a stance for investors’ safety. On October 29, 2023, in a report by Todayq News, the CFTC Commissioner discussed regulating the crypto sector, drawing parallels with the 2008 financial crisis due to industry instability. She emphasized transparency over new rules, recognized the unique nature of digital assets, and advised studying traditional financial regulations for potential adaptation to crypto. While on January 19, 2023, Romero also emphasized the need for clarity in crypto regulation.