A commissioner from the Commodity Futures Trading Commission (CFTC) has called on Congress to stop allowing cryptocurrency exchanges to “self-certify” and list tokens without oversight.
CFTC Commissioner Christy Goldsmith Romero told an audience at a University of Pennsylvania event on Jan. 18 focused on FTX that the current process was insufficient to ensure proper oversight and said:
“I urge Congress not to allow newly regulated crypto exchanges to self-certify products for listing under the current process, which limits CFTC oversight.”
“It is essential to put in place barriers against regulatory arbitrage, including banning the use of the self-certification process,” she added.
Currently, crypto exchanges can “self-certify” the security of their product before listing, unless the CFTC blocks the listing within 24 hours.
She said the process is used to list products such as crypto futures is not adequate for this type of asset.
Goldsmith Romero added that crypto businesses looking to issue tokens could use the CFTC’s cryptocurrency regulatory framework to bypass registration with the Securities and Exchange Commission (SEC).
Proposals to give the CFTC an increased role in supervision of the crypto industry were presented to Congress in 2022.
Crypto “Guardians” Must “Accelerate”
During her speech, the commissioner also called on lawyers, compliance experts, celebrities, venture capital firms and pension fund investors to conduct better due diligence on crypto firms.
“The gatekeepers themselves must also step up and call for compliance, controls and more governance without allowing the promise of wealth and corporate marketing to silence their objections to the obvious flaws.”
A note on FTX filing for bankruptcy in November 2022 mishandling and misplacing customer fundsGoldsmith Romero said these entities “should have seriously challenged the operating environment at FTX prior to its collapse.”
“The digital asset industry has a long way to go if it is to regain any public trust,” she added.
Some crypto industry observers continued to argue that the circumstances behind FTX’s collapse should not be tied to the digital asset space or lack of regulation.
SEBA Hong Kong CEO Ludovic Shum told Cointelegraph during an interview this week that the fall of FTX could easily have happened in any other industry.
“At the end of the day, it comes back to trust in terms of checks and balances […] It was just unfortunate that it happened in this fast-growing area of the crypto world where it could easily happen to banks, securities, houses, asset managers,” Shum said.
Meanwhile, Lachlan Feeney, founder and CEO of blockchain development agency Labrys, said the industry needs more oversight, not necessarily regulation, to prevent another disaster.
“The FTX scandal didn’t happen because of a lack of regulation. FTX worked [allegedly] illegally; ignoring existing regulations rather than capitalizing on the absence of regulation.”
“There probably should be more oversight to stop unscrupulous players and activity before situations escalate, but we don’t need masses of new regulations and red tape that discourage innovation. We need clarity in existing regulations,” he said in a statement to Cointelegraph. .