U.S. CFTC commissioner warns of threats if crypto companies self-certify #U.S #CFTC #commissioner #warns #hazards #crypto #corporations #selfcertify

By Chris Prentice and Hannah Lang

NEW YORK/WASHINGTON (Reuters) – A best official with the U.S. Commodity Futures Trading Commission (CFTC) on Wednesday ideas to warn lawmakers in opposition to allowing for cryptocurrency exchanges to self-certify with the agency to list merchandise for trading.

The CFTC presently allows self-certification for exchanges to list contracts for other products and solutions, these types of as commodities. Lawmakers had been taking into consideration a very similar process as aspect of proposed crypto legislation staying hammered out last year.

But CFTC Commissioner Christy Goldsmith Romero reported the system would open the door to “regulatory arbitrage” as some crypto assets are very likely securities that will need to be overseen by a distinct company, the Securities and Exchange Fee (SEC).

“Oversight is required to prevent abuse” of the method, she reported, in accordance to remarks ready for an celebration at the College of Pennsylvania.

Her warnings arrive as lawmakers regroup to draft legislation to far better oversee the troubled crypto field, which had a wave of bankruptcies past year and proceeds to reel from FTX’s sudden collapse and alleged fraud.

Romero also raised thoughts about the degree of owing diligence corporations carried out just before investing in FTX, suggesting there could be incentives “to transform a blind eye” to red flags in a aggressive industry.

Federal prosecutors have introduced costs versus three of FTX’s former best executives, accusing them defrauding investors and misappropriating purchaser cash.

The SEC is also probing FTX investors’ thanks diligence, according to two resources familiar with the inquiry.

In buy to get back the public’s have confidence in subsequent the FTX meltdown, the crypto market must enshrine solid corporate governance and boost the roles that gatekeepers like lawyers and compliance industry experts perform at corporations, Goldsmith Romero mentioned.

“Gatekeepers ought to have critically questioned the operational surroundings at FTX in the lead-up to its meltdown,” she reported.

(Reporting by Chris Prentice Editing by Josie Kao)

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