In a statement Thursday, Romero stated, “In light of the emergence of distributed ledger networks, certain markets have begun to adopt or explore their applications. Cloud data storage and computing have become widely adopted, and the potential of artificial intelligence to revolutionize businesses is increasingly recognized.”
The Commissioner emphasized that “alongside these advancements come inherent risks that need to be addressed and managed effectively.”
Romero specifically emphasized the potential hazards inherent in digital asset markets, citing, inter alia, the recent failures of Silvergate and Signature banks – both crypto-friendly financial establishments that previously catered to numerous notable cryptocurrency firms prior to closing their doors earlier this year.
As per her assertion, risks may emanate from the regulated exchange of cryptocurrency derivatives, while “unregulated spot markets carry additional risks, as seen with the collapse of FTX, Terra Luna, Celsius, and numerous others that have resulted in substantial losses.”
“This is in addition to operational risks and risks associated with rampant fraud and illicit finance in some parts of the crypto markets,” Romero added.
The Commodity Futures Trading Commission (CFTC) places particular emphasis on the topic of crypto custody.
“Brokers may consider holding customer property in the form of stablecoins or other digital assets that could result in unknown and unique risks,” said Romero. “These brokers may face third-party custody and other risks that should be identified and managed.”
CFTC has recently commenced an advance notice of proposed rulemaking, whereby it will be receiving public feedback for a duration of sixty days. Subsequent to this initial stage, a formalized set of regulations will be formulated. The definitive iteration of the regulation will be subject to a voting procedure in order to obtain approval.
The regulatory agency has recently been engaging in intense surveillance of the cryptocurrency industry and its major players.
Earlier this week, the CFTC issued a cautionary notice to all registered entities and prospective applicants regarding its intention to closely monitor the development and dissemination of new cryptocurrency-related products and services.
In March, the regulatory body initiated legal action against Binance, alleging that the foremost cryptocurrency exchange on the global stage was involved in numerous contraventions of derivatives trading regulations.
The lapses observed include Binance’s inadequacy in complying with registration requirements as stipulated for the offering of derivative products to consumers residing in the United States. Insufficient supervision of activity on its exchange, inadequate implementation of anti-money laundering (AML) and know-your-customer (KYC) controls, and conscious facilitation of United States (U. S) evasion or assistance thereof are areas of concern for clients. It has come to light that certain clients are actively avoiding regulatory bodies.
