United States Commodity Futures Trading Commission (CFTC) Commissioner Christy Goldsmith Romero has called for the modernization of protection measures using technological advancements, warning that failure to do so will negatively impact American investors. Speaking at the North American Securities Administrators Association’s annual meeting in San Diego, Romero emphasized the importance of regulators understanding the implications of technology on finance and law. In her speech, she stated, “As regulators are making policy decisions on next-generation technology, it is critical that we have a foundational understanding of the technology, and its implications for finance and law.”
To bolster investor protections and guardrails, Romero has appointed technology experts in fintech, responsible artificial intelligence, cryptocurrency, blockchain, and cybersecurity to the CFTC’s Technology Advisory Committee (TAC). This committee will focus on identifying ways to incorporate Know Your Customer (KYC) and Anti-Money Laundering (AML) processes into decentralized finance and cryptocurrency investments. Additionally, the TAC will work towards promoting responsible artificial intelligence development and governance in decision-making that affects investors and markets.
Recognizing the evolving landscape of crypto investigations, Romero highlighted a shift towards monitoring social media platforms like X (formerly Twitter), Reddit, and Facebook. These platforms can provide valuable insights and evidence of intent for regulators, as well as serve as warning channels for scams to protect investors. Romero emphasized the importance of tools such as tracing funds, using the blockchain, link analysis, social media monitoring, and data analytics to aid in investigations.
To combat financial fraud, Romero proposed the establishment of a National Financial Fraud Registry. This registry would serve as a centralized record of all crimes and fines related to financial fraud, enabling investors to conduct background checks for ongoing investigations or fraud-related fines imposed on companies. Romero initially proposed the creation of this registry in December 2019, stating, “Once established, each federal agency would register its convictions, sentencings, civil fines, and resolved enforcement actions. State and local agencies could join to achieve a true national fraud registry.” Such a platform would help investors mitigate the damages caused by financial fraud.
In conclusion, Romero emphasized that by collaborating and implementing these modernized protection measures, federal and state officials can enhance investor safety. The appointment of technology experts and advancements in regulatory tools will enable regulators to keep pace with evolving technologies and effectively safeguard American investors.
Related: CFTC Commissioner Calls for Crypto Regulatory Pilot Program
In April, Romero also advocated for crypto companies to verify the digital identity of users to manage associated risks better. This approach would reduce anonymity in crypto transactions while still providing financial privacy for customers. Romero encouraged exchanges and decentralized finance (DeFi) platforms to prioritize user digital identity verification.
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