A US Commodity Futures Trading Commission (CFTC) senior official plans to issue a warning against letting cryptocurrency exchanges self-certify and list products without prior oversight.
The CFTC has always allowed exchanges to certify its other listings, such as commodities. Notably, lawmakers were considering a similar process as part of the proposed crypto legislation agreed upon last year.
However, Christy Goldsmith Romero, the CTFC commissioner, said that the process would open the door to “regulatory arbitrage” since some crypto assets could be securities. As securities, they need oversight by another agency, the Securities and Exchange Commission (SEC).
Notably, the current system allows crypto exchanges to “self-certify” their listings safely unless the CFTC blocks the listing within 24 hours. Hence, this process, which also lists crypto futures and other products, needs to be revised due to the asset nature:
“Oversight is necessary to prevent abuse.”Christy Goldsmith Romero, the CTFC commissioner
The commissioner also called on venture capital firms, pension fund investors, lawyers, celebrities, and compliance professionals to step up and do thorough research on crypto firms. She added that they should not allow the company’s marketing pitch and promises of riches to “silence their objections to obvious deficiencies.”
Regarding the FTX bankruptcy declaration in November after mishandling customer funds, Romero said that the regulators should have previously questioned the FTX operational environment that would eventually lead to its downfall. She added that the digital asset industry must work to regain public trust.