CFTC commissioner says proposal to reassess risk management could consider crypto

Christy Goldsmith Romero, commissioner with the United States Commodity Futures Trading Commission (CFTC), has commented on a proposal amending the government body’s Risk Management Program with respect to digital assets.

In a June 1 notice, the CFTC said it would be opening a proposed rule change for amendments to its risk management requirements applicable to swap dealers and futures commission merchants. Romero said in a public statement that the proposal could allow the commission to address risks associated with certain crypto investments, citing the failure of Silvergate Bank.

“These technological advancements, with their accompanying risks, necessitate the Commission revisiting our regulatory oversight, including our risk management requirements,” said Romero. “Existing Commission rules require that banks’ and brokers’ risk management programs ‘take into account’ risks related to lines of business. That could include, for example, digital asset markets.”

The CFTC is seeking public comment on the Risk Management Program (RMP) requirements for swap dealers and futures commission merchants. Learn more: https://t.co/Vs1rb9qfey

— CFTC (@CFTC) June 1, 2023

According to the commissioner, the potential interest of brokers into the crypto derivatives market could “carry additional risks”. She pointed to the collapse of crypto exchange FTX, Terra and Celsius, as well as areas with “rampant fraud and illicit finance.”

“Evolving technologies like digital assets, artificial intelligence, and cloud services, also have emerged as areas that can carry significant risk.”

The CFTC will leave the proposal open for public comment for 60 days following publication in the Federal Register. After that time, the commission could introduce a formal rule change leading to a vote among its leadership.

Related: ETH can be both a security and a commodity, former CFTC commissioner says

Since being sworn into office in March 2022, Commissioner Romero has often acted as a crypto-friendly voice in the CFTC, calling for oversight to ensure investor protection and public trust. In April, she proposed the CFTC reduce the anonymity of certain tokens in order to better manage the risks associated with digital assets.

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