Christy Goldsmith Romero, the Commodity Futures Trading Commission (CFTC) commissioner, believes cryptocurrency exchanges should not be allowed to self-certify and list tokens without oversight.
She said the current process wasn’t adequate to ensure proper oversight. Romero urged Congress to avoid permitting newly-regulated crypto exchanges to self-certify products for listing, under the current process that limits CFTC oversight.
The commissioner said it’s critical to institute guardrails against regulatory arbitrage, which includes prohibiting the use of the self-certification process. Crypto exchanges can currently self-certify their product’s safety before listing unless the regulator blocks the listing within 24 hours.
Romero said the process used to list products such as crypto futures is not adequate for that type of asset. She added that crypto businesses looking to issue tokens could use the CFTC’s crypto regulatory framework to evade registration with the Securities and Exchange Commission. It should be noted that Congress in 2022 introduced proposals to give the CFTC an increased role in oversight of the crypto industry.
The CFTC executive called on lawyers, compliance professionals, celebrities, venture capital firms and pension fund investors to conduct better due diligence on crypto firms. Romero said the gatekeepers themselves need to step up and call for compliance, controls, and other governance without allowing the promise of riches.