The current crypto market downturn is comparable to the 2008 global financial crisis, and more regulatory oversight is needed, according to Christy Goldsmith Romero, commissioner of the Commodity Futures Trading Commission (CFTC).
Speaking at a forum hosted by the International Swaps and Derivatives Association in New York on Wednesday, Romero said the crypto market has shown “vulnerabilities” similar to those in the global financial crisis, and stressed that contagion from crypto to traditional markets is a real risk.
“Cryptocurrency was supposed to break from the traditional financial system, and all of its fragility and vulnerabilities. However, this spring, unregulated crypto markets revealed their vulnerabilities to similar financial stability risks as traditional finance, with parallel themes from the 2008 financial crisis,” Romero said.
The Democrat-appointed CFTC commissioner further said that she is an advocate of a “same risk, same regulatory outcome” approach, which inevitably means drastically increased regulation for the crypto space.
In a tweet posted on Thursday, Romero elaborated on her stance towards the interlinking of crypto and traditional finance:
In her speech, Romero went on to describe how regulators in 2008 were “caught unaware” of the fragility of financial institutions and products she said were “unregulated and under-regulated.”
“The consequences fell hardest on American families. High unemployment. The loss of trillions in wealth. A housing crisis. A deep recession,” she said.
Notably, the CFTC commissioner argued that her own agency, rather than the SEC or other US financial regulators, should be given more authority to regulate crypto.
“Congress can address financial stability risks by providing additional authority to the CFTC,” she said, noting that this would be in line with treating crypto the same as other parts of the financial system.
Up until now, the SEC – under Gary Gensler’s leadership – has been the main regulator on crypto-related matters in the US. However, the CFTC, which traditionally oversees only commodity derivatives markets, has had some success in its bid to be granted more control over the crypto space, with multiple Congress bills now suggesting that the agency should be given authority over the spot crypto market.
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