In recent statements, CFTC Commissioners Christy Goldsmith Romero and Kristin Johnson emphasized the urgent need for regulations in the cryptocurrency sector. This call to action follows the high-profile collapses of major crypto entities like FTX, Binance, Celsius, and Voyager. Speaking at the Federal Reserve Bank of Atlanta, Johnson highlighted the necessity of segregating and preserving customer deposits to safeguard consumer interests.
Johnson stressed the importance of developing regulations around the custody of crypto assets. She proposed rules to prevent the commingling of company funds with customer deposits, citing this as a vital step in reinforcing customer asset protection. LedgerX, a crypto derivatives platform that had oversight from the CFTC and successfully navigated the FTX collapse, was referenced as a model for maintaining liquidity through effective fund separation.
Clarity and coordination in the spotlight
CFTC Chair Rostin Behnam has also expressed the need for clear directives from Congress, especially concerning spot market assets. The CFTC’s current regulatory authority is limited to derivatives contracts, with enforcement power extending to cases of fraud or manipulation. Johnson pointed out the ambiguity in dealing with certain assets in the spot market, underlining the need for clarity.
In addition to Romero’s support for regulation, she underscored the importance of the CFTC responding to warnings about changing market structures. At the Consumer Federation of America’s Financial Services Conference, she highlighted the risks posed by new market models that combine traditional roles of exchanges and brokers. Romero advocated for issuing guidance or rules to address these structural changes and for the CFTC to collaborate with other regulatory bodies.
Impending reforms and market impact
Johnson indicated that the CFTC is poised to introduce market structure reforms in the coming weeks, not only in the crypto sector but also in the voluntary carbon markets. These reforms aim to establish protections for customer properties in non-intermediated clearing markets, a move that gains significance as the market leans towards offering leveraged crypto products to retail investors.
The collective stance of the CFTC commissioners sends a strong message about the need for immediate and effective regulatory measures in the cryptocurrency sphere, balancing innovation with consumer protection.
