CFTC Commissioner Proposes Measures to Improve Investor Protection

UTC by Babafemi Adebajo · 2 min read
CFTC Commissioner Proposes Measures to Improve Investor Protection
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Rather than backtracking trade activities after the fraud has occurred, the CFTC commissioner believes the focus should be on preventing them.

A commissioner of the Commodity Futures Trading Commission (CFTC), Christy Goldsmith Romero has proposed several measures to improve investor protection. Romero made the proposal while speaking at the North American Securities Administrators Association’s annual meeting in California.

According to the Federal Trade Commission, Americans reportedly lost about $3.8 billion in 2022 to investment scams. This suggests a greater need to protect investors.

Romero emphasized the need for the government to keep pace with innovations to enact the right policies that will help investors. She said:

“It is critical that we have a foundational understanding of the technology, and its implications for finance and law.”

Thereafter, the commissioner appointed Financial technology experts in responsible artificial intelligence, cryptocurrency, blockchain, and cybersecurity. These experts would join the CFTC’s Technology Advisory Committee (TAC).

Among other things, TAC experts are to identify novel ways to incorporate Know Your Customer (KYC) and Anti-money Laundering (AML) measures into decentralized finance and crypto investments. The experts also promote responsible artificial intelligence (AI) development.

A Different Approach

Rather than backtracking trade activities after the fraud has occurred, Romero believes the focus should be on preventing them. From tracking intent through social media platforms like X and Reddit, the CFTC commissioner believes regulators can be more proactive.

She noted that it will be necessary for regulators to embrace different tools if this is to be the case.

“Tracing funds, tracing crypto, using the blockchain, using link analysis, using social media, and data analytic tools should all be in a regulators’ tool kit,” she concluded.

National Financial Fraud Registry Can Improve Investor Protection

Meanwhile, Romero has also proposed the establishment of a National Fraud Registry. She acknowledged the efforts by regulators to compile databases of disciplinary actions or consumer complaints. However, she noted the lack of a national database to make it easier for investors to search across federal agencies or state regulators.

“A centralized registry would make it easier for the government to identify repeat offenders and deter potential fraudsters,” Romero said. She also noted that it would help the public verify people before committing their money, trust, and business.

This is not the first time Romero has proposed such an approach. She first floated the idea in 2019, but the proposal failed to gain traction. This time, Romero promises to circulate the idea among federal agencies and get feedback from various groups.

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Babafemi Adebajo

An experienced writer with practical experience in the fintech industry. When not writing, he spends his time reading, researching or teaching.

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