United States Commodity Futures Trading Commission (CFTC) commissioner Christy Goldsmith Romero commented on a proposal to make changes in the regulator’s Risk Management Program with digital assets.
In the notice released on June 1st, the CFTC said it would open the proposal to change the digital assets risk management program. It is applied to swap dealers and futures commission merchants. Romero said in a public statement that the proposal could include addressing the link associated with some crypto investments. This is stated regarding Silvergate Bank.
The CFTC regulates the U.S. derivatives markets. The derivative markets include the swap markets, commodity futures, and also over the counter (OTC) markets. It protects the public from frauds and scams related to the sale of assets in finance. The CFTC is an independent agency.
CFTC Authorized to Enforce Actions
Romero said that the potential interest of brokers in the crypto derivatives market could carry additional risks. She highlighted the fall of crypto exchanges FTX and Terra, and Celsius.
Further stating, she said that existing commission rules need banks and brokers to take into account the risk related to this line of business. That could include crypto markets.
The cryptocurrency market is highly volatile. It has high risk as each cryptocurrency has its particular quirks. Prices are driven by the supply of coins from miners and the demand for them from purchasers. The CFTC treats digital currency as commodities. Its jurisdiction is implicated when digital assets are used in derivatives contracts. If it is used in fraud and manipulation, then also it is involved in jurisdiction.
The Proposal Open For Public Comment
The commissioner of CFTC stated that the proposal to make amendments to the risk management program associated with digital assets is open for public comment for 60 days, which is followed by publication in the Federal Register. After this period, amendments can be made to digital assets risk management.
To better manage the risk associated with crypto and certain tokens, Rodero proposed CFTC reducing the anonymity in April. Under this, the crypto companies are requested to verify the identity of users. The previously implemented regulations from CFTC include blocking of self-certifying crypto by crypto exchanges.
Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.
Source: https://www.thecoinrepublic.com/2023/06/03/cftc-proposal-in-alteration-of-risk-management-for-digital-assets/