The independent US federal agency Commodity Futures Trading Commission (CFTC) takes a keen interest in crypto regulation. Ahead of the 2022 crypto forum, a commissioner from the agency made statements about the sector. Commissioner Christy Goldsmith Romero spoke about the risk that cryptocurrency poses to the global economy.
Cryptos bring new risks to financial stability
The CFTC has published public statements and remarks by Commissioner Christy Goldsmith Romero, October 26. According to Christy Goldsmith, one word should guide the federal government’s approach to crypto“. “This word is risky“, she added. The commissioner has noted that cryptos face the same challenges as the traditional financial system. They have not succeeded in overcoming the shortcomings of this system. However, they were created for that, she noted.
She said: “Unregulated Crypto Markets Have Revealed Vulnerabilities to Financial Stability Risks Similar to Traditional Finance,with parallel themes to those of the 2008 financial crisis“. “The risk to financial stability will increase, and could rise to the level of systemic risk“, she clarified.
In addition, Christy Goldsmith believes that the new asset class brings new risks. There are the anonymity that allows terrorists and criminals to use cryptos to launder money. The asset class is also used to finance illegal activities and circumvent sanctions. It is also linked to a risk of fraud, swindling and manipulation of investors.
Tackling Financial Stability Risks Now
“The US government should not wait for cryptos or markets to reach the level of systemic risk to address financial stability risks. Similar to post-crisis reforms, Congress can address financial stability risks by granting additional powers to the CFTC“said the commissioner.
She calls for the implementation of effective and strong safeguards to reduce the risks of cryptos on the economy. She suggested that the United States should take the time to put in place an effective and sustainable regulatory framework, without rushing. This, while the national debate on the regulation of the sector intensifies and that more and more stakeholders on the value chain call for the adoption of a clear regulatory framework.
CFTC Commissioner Christy Goldsmith Romero believes that a full risk assessment of to cryptos has not yet been made. She urged the authorities to do so in order to put in place an appropriate regulatory framework. Finally, she added that financial stability can be strengthened by applying the “post-crisis reforms that worked before to keep US markets the strongest and safest in the world“.
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