CFTC Commissioner Christy Goldsmith Romero has asked the U.S. Senate to tighten a piece of crypto regulation, according to a Jan. 18 report from the Wall Street Journal.
Commissioner warns against self-certification
Goldsmith Romero said today:
“I urge Congress to avoid permitting newly-regulated crypto exchanges to self-certify products for listing.”
That advice concerns a bill — the Digital Commodities Consumer Protection Act (DCCPA) — which would grant self-certification powers to exchanges. This would allow exchanges to maintain substantial control over the specific crypto tokens they list for trading.
Goldsmith Romero asserted that self-certification could reduce the Commodity Futures Trading Commission’s ability to oversee cryptocurrency exchanges.
She also warned that self-certification could allow exchanges to avoid the reach of another regulator: the U.S. Securities and Exchange Commission.
As such, Goldsmith Romero urged the U.S. Senate to strengthen requirements for exchanges contained within the bill before advancing it further.
Bill is designed to give CFTC greater control
The Digital Commodities Consumer Protection Act has been under consideration since at least August 2022, when it was introduced in the U.S. Senate.
The bill is intended to give the CFTC control over standard crypto trading regardless of particular details like self-certification. The text of the DCCPA explicitly grants the CFTC “jurisdiction to oversee the spot digital commodity market.”
The DCCPA is controversial for a number of other reasons. Former FTX CEO Sam Bankman-Fried lobbied in favor of the bill last year. Some speculated that FTX’s collapse in November would delay the bill by motivating lawmakers to revise it and strengthen its requirements for exchanges. Perhaps not coincidentally, Goldsmith Romero made her statements today during a panel on the collapse of FTX.
The bill is also controversial since it requires all digital asset services to register with the CFTC. This implicitly prevents decentralized exchanges and DeFi platforms from existing, and the bill has been widely labeled a “DeFi killer”.
Currently, the CFTC regulates derivatives trading. This has given the regulator sufficient room to participate in high-profile crypto cases, such as actions against FTX and associated parties and Mango Markets attacker Avraham Eisenberg.
Though those cases involved some matters unrelated to derivatives, the CFTC could share responsibilities with other agencies so that charges were comprehensive.