CFTC Commissioner compared crypto market crash to 2008 financial crisis

What’s new? US Commodity Futures Trading Commission (CFTC) commissioner Christy Goldsmith Romero called on Congress to close the gap in cryptocurrency regulation. Commenting on the recent decline in the digital asset market, which resulted in the withdrawal of more than $400 billion from the sector in a few days, the official compared the situation to the financial crisis of 2008. According to her, the main risks of the crypto industry are the large size of the market and the lack of control, Axios reports.

The Axios material

What else did Romero say? According to the official, supervisory authorities have no ways to regulate the crypto industry because of gaps in the legislation. For example, the commissioner noted that the CFTC has anti-fraud powers, but they are quite limited.

Romero says that crypto markets are highly correlated with broader stock markets, citing the rise and fall of bitcoin along with the NASDAQ index. She called this correlation an incentive for institutional and retail investors to invest in digital assets.

The commissioner added that a notable difference between today's crypto market and the economy of the 2000s is that large institutional investors are not yet sufficiently immersed in the digital asset space because they are concerned about the lack of control over it.

Romero also commented on the crypto-regulation bill introduced on June 7 by Senators Cynthia Lummis and Kirsten Gillibrand. The commissioner would like the Congress to grant her agency greater authority to regulate the digital asset industry.

The bill by Lummis and Gillibrand aims to fully incorporate cryptocurrencies into the U.S. financial system and is meant to clarify the rules for regulating and classifying them. It provides for the creation of a self-regulatory organization, which would be responsible for controlling cryptocurrencies and other digital assets. The organization must also be registered with the CFTC and the Securities and Exchange Commission (SEC).

On May 27, CFTC Commissioner Caroline Pham compared investing in cryptocurrencies to buying lottery tickets. She said this in reference to the recent collapse of the Terra blockchain ecosystem (LUNA). The project was a tragedy for the entire crypto market, she said.