Christy Goldsmith Romero, the commissioner at the Commodity Futures Trading Commission (CFTC) of the United States has issued a statement pertaining to crypto and new investors.
She made a statement about cryptocurrencies and cybersecurity while she was attending a derivatives conference being Held in Singapore for the Asian continent.
Goldsmith Romero’s Statement
On November 30, she spoke about cryptocurrency and cybersecurity, stressing how the best must be extracted from particular technologies.
As per her, these technologies have so much to offer to the entire world and they must be used in the best possible way.
However, she did talk about the safety of the investors and people who are interacting with these technologies on a regular basis.
She stressed that the firms and the regulatory authorities must do whatever they can to ensure that the people interacting with these technologies are kept safe.
Proposals by Goldsmith Romero
From her participation and discussion at the conference, people realized that she had come fully prepared to make her views known.
While speaking on behalf of the CFTC of the United States, she presented two proposals.
The first proposal revolved around the safety and protection of consumers against the risks and threats of cryptocurrencies.
The second proposal revolved around the protection of the overall markets from the impact of cryptocurrencies.
She added that the first matter here is to define the retail investors. After that is redefined, they can move on to the next step of protecting the house retail investors.
She made it clear that as per them, the cryptocurrency investors are not household retail investors. She defined the crypto investors to be young, mainly born after 1980.
She went on to say that such investors are diverse and do not make more than $50,000 per year. This is not the kind of investor they are used to dealing with at the CFTC.
Different Treatments for Crypto Investors
She stated that as they do not fall under the same category as the usual investors they handle, they will not be treated the same way.
They need to have stricter protection rules for such investors who are not making enough from their trades. They need to make sure that such investors are not crushed.
They have to provide them with extra customer protection and they have to do it right away.
She added that they will need to create two categories for the retail investors. The first category needs to be household retail investors.
The second one is going to be the professional investors as well as the ones that have very high net worth and are used to make heavy investments.
When they are able to make these categories, they will be able to provide them with better protection as per their categories.
Difference between Traditional Finance and Crypto
She added that in the traditional financial sector and investment environment, it is the broker that assesses the profiles of the investors. After the assessment, it is the broker who determines how much an investor can invest.
On the other hand, cryptocurrency exchanges and brokerages do not work on that. Instead, they let the investors go all out without having a look at their past trading experience or exposure to financial resources.
Two Things to Expect from the Commissioner’s Proposals
The first positive point from Goldsmith Romero’s statement is that she has not denied the existence of cryptocurrencies.
Instead, she admitted that cryptocurrencies exist and there is a certain age group and class that is very much into cryptocurrencies.
Her criticism was constructive in favor of cryptocurrencies, as she indirectly urged the cryptocurrency investment firms to increase the protection of their investors.
She mentioned that the investors must be protected and advised accordingly before they put their money in a crypto asset or crypto trading market.
The second positive point is the CFTC has a positive stance toward the cryptocurrency industry. Instead of criticizing it in a negative manner, she had positive things to talk about the crypto technology.
She urged that the sector must be made stronger and safer for new investors.