Until date, some uncertainty continues to surround the distribution of cryptocurrencies in the United States, a situation that prompted the release of a new report authored by Former CFTC Chair Timothy Massad to address the matter.
In the 69-page report titled — It’s time to strengthen the regulation of crypto-assets — Massad who is also a Harvard University fellow, noted that certain loopholes exist in the current regulatory approach adopted by U.S authorities for the cryptocurrency industry.
Specifically, he mentioned the lack of regulation for cryptocurrency exchanges which is the underlying reason behind fraud, manipulation, and existence of platforms that do not have sufficient assets to cover customer claims.
Also, he stated that there is no definite structure to mitigate operational risks such as crypto exchanges engaging in proprietary trades against customers, “something that the New York Stock Exchange cannot do,” he notes.
According to him, it is the absence of these measures that are responsible for the lack of investor protection in the crypto space as well as the susceptibility of these platforms to hack and other forms of cyber attacks that has broader consequences on the financial landscape.
The Way Forward For U.S Crypto Regulation
Aside from mentioning existing regulatory loopholes, the Former CFTC Chair prescribed possible solutions that could help the U.S “exert global authority” on a relatively new industry.
He suggested that the Congress should appoint either the U.S SEC or the CFTC regulate the offering, distribution, and trading of crypto-assets, including regulation of trading platforms, custodians (or wallets), brokers and advisors.
Also, he recommended that these regulatory bodies be provided with the necessary resources, noting that it “would be inefficient to create a new agency.”
Among other things, Massad also suggested that any regulatory body appointed for the supervisory role will have to decide whether international projects soliciting investments from the U.S would have to meet the State's regulations or other compliance measures determined by the country they operate from.
In recent times, Timothy Massad is not the only notable figure to request that U.S authorities step up regulation of the crypto industry. In January, former Washington D.C Rep George Nethercutt urged the U.S SEC to stop applying securities law to cryptocurrencies.
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