April 19, 2024
CFTC Commissioner advocates tech adoption for investor safeguarding
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CFTC Commissioner Urges Regulators to Harness Technology for Investor Protection

United States Commodity Futures Trading Commission Commissioner Christy Goldsmith Romero has advised regulators to embrace technological advancements in enhancing protection measures for American investors. Speaking at the annual meeting of the North American Securities Administrators Association in San Diego, California, Romero emphasized that the failure to keep pace with technology could adversely affect vulnerable investors. She stressed the importance of regulators having a solid grasp of emerging technology and its implications for the financial and legal sectors when making policy decisions.

To bolster investor protections and regulatory safeguards, Romero appointed experts in various technology fields, including fintech, responsible artificial intelligence, cryptocurrency, blockchain, and cybersecurity, to the CFTC’s Technology Advisory Committee (TAC). These experts are charged with finding ways to incorporate Know Your Customer (KYC) and Anti-Money Laundering (AML) processes into decentralized finance and cryptocurrency investment avenues.

Additionally, the TAC is responsible for promoting responsible artificial intelligence development, recognizing the growing importance of AI in regulatory decision-making.

In response to shifting priorities in federal crypto investigations, which now involve monitoring social media platforms such as X (formerly Twitter), Reddit, and Facebook, Romero suggested the use of various tools to aid these investigations. These tools include tracing funds, crypto, utilizing blockchain technology, link analysis, social media analysis, and data analytics, all of which should be essential components of regulators’ toolkits.

According to Romero, the content shared on social media platforms can serve as strong evidence of intent and can also be used by regulators to issue warnings about scams and protect investors.

To mitigate the damages resulting from financial fraud, Romero proposed the establishment of the National Financial Fraud Registry, a centralized database documenting all financial fraud-related crimes and fines. This registry would enable investors to conduct background checks on companies involved in ongoing investigations or facing fines for fraud.

Romero initially proposed the registry in December 2019, envisioning it as a comprehensive platform where federal agencies, state authorities, and local agencies could record their convictions, sentences, civil fines, and enforcement actions related to fraud.

Romero believes that the creation of such a unified platform could significantly discourage financial fraud. In closing, the CFTC commissioner emphasized that collaboration between federal and state officials is crucial for enhancing investor safety. In a previous statement from April, Romero called on crypto companies to verify users’ digital identities as a means to reduce anonymity and better manage associated risks while still preserving financial privacy for customers. This appeal extends to both exchanges and decentralized finance (DeFi) platforms.

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