The Commodity Futures Trading Commission’s Kristin Johnson said the agency should consider steps it can take under its current regulatory authority to protect customers following the failure of FTX.
Democratic Commissioner Johnson said she has spoken with fellow commissioners and with other divisions inside the agency to look at differences in custody regulations for intermediated and disintermediated market structures.
Futures commissions merchants, or FCMs, for example, must separate out customer assets as an intermediary, Johnson said on Wednesday at a conference hosted by Berkeley Law. FCMs solicits or accepts orders to buy or sell futures contracts.
“In non-intermediated markets, we don’t have parallel statutory or regulatory protections,” Johnson said.
Johnson said regulations need to be revisited to figure out where the CFTC has not “introduced parallel protections for customers in this nonintermediated space.”
Johnson also spoke about LedgerX, which was bought by the now collapsed FTX in 2021 and is registered as a derivatives clearing organization with the agency. The CFTC had no ability to be a part of that sale’s approval in advance, Johnson said, saying that should be revisited.
Johnson made a call-to-action last month, calling for new rules and asking Congress to give the CFTC authority to conduct due diligence on firms seeking to buy into registered entities.
Lawmakers introduced bills last year to regulate crypto including the Digital Commodities Consumer Protection Act, or DCCPA. That bill had support from former FTX CEO Sam Bankman-Fried and would have given the CFTC the authority to regulate digital assets. The bill would need to be reintroduced this year.
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