Christy Goldsmith Romero, a commissioner for the US Commodity Futures Trading Commission (CFTC), on Wednesday urged the US Congress to stop cryptocurrency exchanges from being able to “self-certify” and list tokens without CFTC regulatory oversight.

Speaking at an FTX-focused event at the University of Pennsylvania, Romero criticized the current process that crypto exchanges use to certify crypto products like futures ahead of listings. At present, a crypto exchange can self-certify crypto-financial products ahead of a listing and the CFTC only has 24 hours to block the listing.

“I urge Congress to avoid permitting newly-regulated crypto exchanges to self-certify products for listing, under the current process that limits CFTC oversight,” the CFTC commissioner stated.

The CFTC currently allows a self-certification process for exchanges to list other products like commodities. Last year, Congress was considering a bipartisan crypto bill that would allow a similar process for digital asset listings.

Self-certification Opens Door to Regulatory Arbitrage

According to Romero, this isn’t sufficient for crypto assets. She warned that self-certification would open the door to “regulatory arbitrage” – crypto firms issuing tokens that should really be overseen by the Securities and Exchange Commission (SEC) might use the CFTC process to dodge regulatory scrutiny. “Oversight is necessary to prevent abuse”, Romero said.

Blocking self-certification would raise the barriers for the growth of cryptocurrency markets, as exchanges would have a tougher time listing new assets. But that isn’t necessarily a bad thing – crypto is rife with scam firms and tokens. Increasing scrutiny over what gets listing on crypto exchanges could potentially help protect consumers from crypto crooks.

Romero Criticizes FTX Investors Lack of Due Diligence

In her speech, Romero also criticized the lack of due diligence that firms conducted prior to making investments in failed and apparently fraudulent cryptocurrency firm FTX. These entities “should have seriously questioned the operational environment at FTX in the lead-up to its meltdown,” she remarked.

More broadly, Romero commented that “if the digital asset industry wants to regain any amount of public trust, it has some work to do”. She suggested that crypto firms should strengthen corporate governance and bolster the roles that lawyers and compliance professionals hold at companies.

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