Former CFTC Chairman Calls For Better Cryptocurrency Regulations In A Report

Timothy Massad, a Harvard University fellow who also served as chairman of the United States Commodity Futures Trading Commission (CFTC) during Pres. Barack Obama’s administration has authored a report dubbed as “It’s time to strengthen the regulation of crypto-assets”, that calls for enhanced regulations on cryptocurrencies.

Published for the Brookings Institution, the report points towards the purported need for better regulation on digital currencies in order to address the illicit use of cryptocurrencies and to take measures for reducing the risk of cyber attacks. Furthermore, the report provides direct recommendations for improvements in the existing cryptocurrency regulations.

Lack of a proper regulatory framework 

The report asserts that there is a gap in the regulation of crypto assets, which attributes to fraud and weak investor protection. Partly represented by the fact that traditional standards required for securities and derivatives market intermediaries are not applied to cryptocurrency trading platforms.

Masad states in the report that cryptocurrency exchanges are not properly regulated and that makes them vulnerable to fraud and manipulation. In addition, the conflicts of interest raise the need for regulations to minimize operational risk and implement system safeguards.

Further noting that insufficient regulatory supervision leads to broader risks with respect to cybersecurity and illicit payments, leading to more hack attacks. The former CFTC Chairman asserts that the U.S. Congress will have to address these issues by developing regulatory oversight the cash market for crypto assets, trading platforms and other intermediaries that operate in the market.

Role of SEC and CFTC

Per Report, there is no need to establish a separate agency as both the U.S. Securities and Exchange Commission (SEC) and the CFTC are definitely competent enough to regulate the industry. Moreover, Congress needs to authorize the SEC to regulate cryptocurrency circulation and regulation of trading platforms, custodians, brokers and advisors.

The legislation should be developed in a similar manner as for futures and crowdfunding, set on core principles rather than specifics for regulations. Massad adds that the industry should continue to develop its own self-regulatory standards.

Jeremy Allaire, the CEO and co-founder of crypto finance company Circle, stated in January that one of the major hurdle faced by cryptocurrency today is the lack of clarity from the SEC. he wrote in a Reddit AMA session:

“The biggest and most immediate regulatory hurdle we face is the lack of specific guidance from the SEC on how to classify various crypto assets. We believe many are clearly currencies and commodities, and there needs to be more specificity on what are really securities. This can unlock a lot of market activity, and also clearly enable the growth of a market for crypto-based securities.”

Read more:Cryptopia Resumes Trading Of 40 Crypto Pairs, Plans To Add More Soon

Image Source: Wall Street Journal