Congress has been urged by a commissioner of the US Commodity Futures Trading Commission (CFTC) to stop allowing cryptocurrency exchanges to “self-certify” and list tokens without regulation.
At a University of Pennsylvania discussion on FTX on January 18, CFTC commissioner Christy Goldsmith Romero informed the audience that the current procedure needed to be revised to ensure proper oversight. In light of the existing procedure’s limitations on CFTC monitoring, she encouraged Congress to refrain from allowing newly licensed crypto exchanges to self-certify products for listing. She continued by saying that it is crucial to put barriers in place to prevent regulatory arbitrage, and part of that is outlawing the use of the self-certification procedure.
“I urge Congress to avoid permitting newly-regulated crypto exchanges to self-certify products for listing, under the current process that limits CFTC oversight.”
At the moment, cryptocurrency exchanges can “self-certify” the safety of a product before listing it unless the CFTC blocks the listing within 24 hours. However, she claimed that the procedure to list goods like cryptocurrency futures needs to be revised for that asset.
Goldsmith Romero said that cryptocurrency companies seeking to issue tokens might be able to avoid SEC registration by using the CFTC’s crypto regulatory framework. In addition, Congress was presented with proposals in 2022 that would strengthen the CFTC’s role in overseeing the cryptocurrency sector.
During her speech, the commissioner urged lawyers, compliance experts, celebrities, venture capital firms, and pension fund investors to perform better due diligence on cryptocurrency firms.
Goldsmith Romero commented on FTX, which filed into bankruptcy in November after misusing and misplacing customer funds, and stated that these agencies should have carefully questioned the FTX operational environment prior to its collapse. She continued by saying that the digital asset industry “has some work to do” if it hopes to reclaim even any of the public’s trust.
FTX’s fall should not be attributed to the digital asset market or a lack of regulation, according to several critics of the crypto sector who have continued to make this claim.
The “Digital Commodities Consumer Protection Act of 2022” was introduced by American senators John Boozman, Cory Booker, Debbie Stabenow, and John Thune. Senator Boozman claims that the legislation will grant the CFTC sole jurisdiction over the spot market for digital commodities, leading to improved consumer protections, market integrity, and industry innovation.
US Senators Cynthia Lummis and Kristen Gillibrand introduced the “Responsible Financial Innovation Act” in June 2022, which grants the CFTC regulatory authority over the spot markets for digital assets. Digital assets that meet the definition of a commodity, such as bitcoin and ether, which account for more than half of the market capitalization for digital assets, will be under the CFTC’s purview.