The former United States Commodity Futures Trading Commission (CFTC) chairman Timothy Massad recently issued a report that requests for enhancing regulations on Cryptocurrencies. The report titled “It’s time to strengthen the regulation of crypto-assets” proposes the alleged requirement for better law on digital currencies, the illegitimate utilization of Cryptocurrencies, in addition to measures for reducing the risk of Cyberattacks. The proposed report also offers direct recommendations regarding advance existing Cryptocurrency regulations.
In his report, the former chairman noted that there is a gap in the regulation of crypto assets that contributes to fraud and weak investor protection, which is partly represented by the fact that traditional standards required for securities and derivatives market intermediaries are not applied to Cryptocurrency trading platforms. He stated that Cryptocurrency exchanges are not properly regulated, making them vulnerable to fraud and manipulation, as well as conflicts of interest, which raises the need for regulations to minimize operational risk and implement system safeguards. Additionally, the report highlighted insufficient regulatory supervision that creates wider risks with respect to cybersecurity and illicit payments, which results in more hacking attacks. Timothy Massad, who also a Harvard University fellow recommended that the U.S. Congress has to address the aforementioned issues by developing regulatory oversight of the cash market for crypto assets, trading platforms and other intermediaries that operate in the market.
According to the report, the U.S. Securities and Exchange Commission (SEC) and the CFTC both have the capability to regulate the industry; there is no need to establish a separate agency. Massad also cited in his proposed report that Congress should authorize the SEC to regulate Cryptocurrency circulation and regulation of trading platforms, custodians, brokers, and advisors. The legislation should also set forth core principles, rather than specifics for regulations, the same way Congress has done for futures and crowdfunding, he added.