CFTC commissioner calls for more crypto regulation
Congress needs to close the gap in crypto regulation, CFTC commissioner Christy Goldsmith Romero told Axios' Dan Primack this morning at an Axios event in Washington on the state of the crypto industry.
Why it matters: According to Goldsmith Romero, regulatory clarity is important not just for consumer protection, but also to help the industry grow.
Driving the news: Today’s event was held during a time of falling crypto prices and mass layoffs in the industry, but also just a week after Sens. Cynthia Lummis (R-Wyo.) and Kirsten Gillibrand (D-N.Y.) issued a draft proposal for regulation of the industry.
- That’s a welcome change because, today, “the CFTC doesn't have any regulatory authority," Goldsmith Romero said. "We can't look at books and records. We can't examine any of these crypto companies or crypto trading in the spot market. We just have zero windows into it, zero oversight, zero scrutiny.”
Flashback: Goldsmith Romero, who spent time at the Treasury Department overseeing the TARP program, noted two similarities between the state of crypto today and what took place in the 2008 financial crisis.
- First, “we've got a pretty sizable market that's largely unregulated. Regulators just have no window into it,” she said.
- And, second, “the market has become pretty broadly correlated with the broader equity markets,” she added.
Yes, but: One big difference between now and 2008 is that there aren’t a lot of financial institutions invested in crypto, according to Goldsmith Romero.
- “Many of these companies are coming in and asking to be regulated because they really can't scale up in the way they need to without a lot of the financial institutions,” she said.
- As a result, her biggest concern right now is customer protection. “If regulation fails to keep pace with technology, the most vulnerable people are going to be hurt,” she added.
The other side: U.S. Rep. Darren Soto (D-Fla.), also a speaker at the event, agreed that regulation was necessary and that it should come from Congress.
- “Congress needs to act to pass some comprehensive laws to help establish where the agencies have jurisdiction, and in addition, to make sure to foster innovation” in the crypto industry, he said.
- Whether it follows the Lummis-Gillibrand model or looks more like the two blockchain bills that already went through the House of Representatives is still TBD, however.
- “We'll put out our own bills, they'll be putting out theirs, and then we'll either go to conference or negotiate between the chambers.”