CQFD, he would say – During her Oct 26 speech at the International Swaps and Derivatives Association (ISDA) Crypto Forum, CFTC Commissioner Christy Goldsmith Romero discussed the risks cryptocurrencies would pose to financial stability. Solutions for regulations were then discussed.
From the birth of Bitcoin to the risks to financial stability
Christy Goldsmith Romero has started his speech, pointing out that he did taught cryptocurrency to law students of Georgetown School of Law et al ‘University of Virginia School of Law.
So she would naturally have been interested in cryptocurrencies. In fact, her ten-year tenure as a special inspector general of the Troubled Assets Relief Program (TARP) helped her discover Bitcoin.
Subsequently, the CFTC Commissioner recalled the origins of Bitcoin (BTC). It would be “born of the 2008 financial crisis and the bailout of the banks”. At least, he would at least be affected by this event.
In her speech, Christy Goldsmith Romero uses material from the introductory section to indicate that the federal government should adopt a risk-focused approach. The target. the goal? Regulate cryptocurrencies.
Earth Tokens: Regulators’ Favorite Cryptocurrency Bad Student
To demonstrate that cryptocurrencies pose financial stability risks, “with themes similar to those of 2008”The CFTC commissioner has expanded the impact of the ecosystem token collapse Land.
TerraUSD, which was the third largest stablecoin by market cap, had seen its value drop to zero. The the consequences were then harmful on other cryptocurrencies like Bitcoin. Terra Foundation executives have “probably” liquidated up to $ 3.5 billion in BTC.
In light of these recent events that have affected the sector, the risk of contagionwhich partly caused the financial crisis of 2008, therefore also concerns cryptocurrencies.
A (presumably) dangerous marriage between cryptocurrencies and traditional finance
Christy Goldsmith Romero insisted that the risk cryptocurrencies pose to financial stability will increase and may become “systemic”. In question? The increase in interconnections between the cryptocurrency industry and traditional finance players, “who perform essential market functions”.
To illustrate this rapprochement between digital assets and traditional finance, Christy Goldsmith Romero cited the case of BNY Mellon. The New York bank has announced the launch of a cryptocurrency custody service. He also indicated that public companies hold cryptocurrencies. In doing so, they indirectly expose their shareholders and creditors.
About this rapprochement between traditional finance and new finance, the CFTC commissioner expressed specific concerns regarding the investments that pension and retirement funds could make in the future in cryptocurrencies.
Bitcoin regulation: more and more power and equal treatment
At the end of these demonstrations indicating the risk that cryptocurrencies pose to financial stability, Christy Goldsmith Romero wants Congress to grant additional powers to the CFTC.
The CFTC Commissioner stresses the need to implement these regulatory measures as soon as possible. He says the government shouldn’t wait for the risks he mentioned to become systemic before taking action.
Christy Goldsmith Romero also recommends applying the ” same risk, same regulatory result In other words, crypto products that currently fall under its jurisdiction must be subject to the same regulatory framework as traditional financial products.
CFTC officials keep asking greater powers to be able to regulate cryptocurrencies. Regulation itself is not harmful to the development of the sector. Indeed, the very use of this additional power over cryptocurrencies could be of concern to companies in the sector. This concern is all the more justified, if the CFTC refuses to recognize the need for a specific framework for cryptocurrencies, instead of applying the provisions governing traditional finance to crypto products, without showing evidence of discernment.
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