CFTC Commissioner Christy Goldsmith Romero emphasizes the critical need to study digital asset risks to prevent future consequences. The recently published CFTC report recommends increased oversight, market surveillance, and regulator-market participant coordination to mitigate DeFi risks.
The report acknowledges the potential benefits of DeFi but highlights the importance of addressing the “complex and significant risks” it poses to the U.S. financial system, consumers, and national security.
To better understand these risks, the report suggests several recommendations for the CFTC, such as conducting research on the regulatory landscape, analyzing risks associated with DeFi platforms, and considering appropriate regulatory responses.
In addition, policymakers are urged to carefully evaluate the costs and benefits before implementing regulatory interventions in the DeFi space. It is crucial to consider targets that would incur the lowest costs and generate the fewest unintended consequences.
Furthermore, the report strongly supports enhanced engagement and collaboration with DeFi builders, regulatory initiatives, and international standard setters.
In a public event on January 8th, Commissioner Romero highlighted the risks associated with neglecting the study of digital asset-related matters. She emphasized the imperative for a collaborative effort to address these concerns.
“From the time that I arrived at the CFTC, I have played a steady drumbeat that we need to study emerging issues related to digital assets or we could risk harmful unintended consequences.”
However, the report suggests considering options for regulating and implementing requirements for discovering and verifying identity information across different layers of the ecosystem. This may include regulating centralized repositories of identity information and credentials, as well as determining the necessary level of identity information that various financial actors need to collect and utilize at different levels of the DeFi stack.
The report serves as a starting point for further discussions, acknowledging the potential risks associated with DeFi, including illicit finance and cyber attacks.
