US Regulator Vows Ironclad Rules to Avert Another FTX Catastrophe!
CFTC Chair Mike Selig is championing new regulations to prevent future crypto collapses like FTX, allowing exchanges to register federally to safeguard digital asset markets. The CFTC is leveraging existing powers and seeking public comment on a new 'crypto asset market' registration category to enhance oversight.
Pro-crypto regulator Mike Selig, Chair of the Commodity Futures Trading Commission (CFTC), has vocalized strong support for implementing new rules to prevent future collapses akin to FTX. Speaking on Fox Business Network’s Varney & Co. show, Selig emphasized that these new regulations would allow crypto exchanges the opportunity to register with the CFTC, thereby safeguarding digital asset spot markets.
The collapse of FTX in 2022, once a prominent crypto exchange, was swift and attributed to gross mismanagement. Its founder, Sam Bankman-Fried, is currently serving a 25-year prison sentence for fraud and other related crimes, following the theft of over $8 billion in customer funds. Selig highlighted this event, stating, “Four years ago, we saw the collapse of Sam Bankman-Fried’s FTX, where he stole over $8 billion in customer funds. That can’t happen under our regime.” He further clarified that FTX’s CFTC-registered subsidiary had its funds safe and secure due to segregation, adhering to the stringent requirements that the agency aims to extend to the broader crypto world.
Despite lawmakers recently blocking the long-awaited Clarity Act, the CFTC and other regulators are pressing forward with rulemaking for the crypto space. Selig indicated that while some exchanges might opt to remain under state regimes, others would pursue federal registration. The CFTC is leveraging its existing powers to oversee crypto markets, demonstrating its proactive stance.
This week, the watchdog initiated a public comment period on a proposed framework designed to establish a new federal registration category: a “crypto asset market.” This category would apply to exchanges that offer leveraged, margined, or financed crypto trades to retail customers. Exchanges that do not engage in leverage could potentially continue operating under state licenses. However, the agency’s interpretation of “leverage” is broad, suggesting that even fully paid trades might fall under its oversight unless customers take immediate delivery of their crypto assets.
CFTC Chair Selig, who previously served as chief counsel at the SEC’s Crypto Task Force, had earlier mentioned that the regulator was preparing for the transition of markets moving “24-7, on-chain.” Both the CFTC and the Securities and Exchange Commission (SEC) have adopted a more accommodating approach to regulating the crypto industry since U.S. President Donald Trump assumed office.