Pro-crypto regulator Mike Selig has said that pushing ahead with new rules will stop another collapse like FTX.
Speaking on Fox Business Network’s Varney & Co. show Wednesday, the Commodity Futures Trading Commission Chair said that crypto exchanges will have the chance to register with the regulator in order to safeguard digital asset spot markets.
Once one of the most popular crypto exchanges, FTX quickly and abruptly went bankrupt in 2022 due to mismanagement. Its founder, Sam Bankman-Fried, is now serving 25 years in prison for fraud and other crimes after $8 billion in customer funds was stolen.
The CFTC and other regulators are pushing ahead with rulemaking for the crypto space, despite lawmakers last month blocking the long-awaited Clarity Act.
“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,” Selig said.
“Actually, Sam Bankman-Fried’s subsidiary that was CFTC registered, all the funds were safe and secure because they were segregated, and we have some of the most stringent requirements of any federal agency when it comes to markets — we want to bring that to the crypto world,” he added.
Selig added that some exchanges may choose to remain under the state regimes, while others will register federally.
The CFTC is relying on powers it already has to regulate crypto markets. The watchdog this week sought public comment on a framework that would create a new federal registration category, called a “crypto asset market,” for exchanges offering leveraged, margined or financed crypto trades to retail customers.
Exchanges that don’t offer leverage could stay under state licenses. But the agency reads “leverage” broadly, which could bring even fully paid trades under its oversight unless customers take delivery of their crypto.
CFTC Chair Selig, formerly chief counsel at the SEC’s Crypto Task Force, last month said that the regulator was preparing for the transition of markets moving “24-7, on-chain.”
Both the CFTC and Securities and Exchange Commission have taken a more friendly approach to regulating the crypto industry since U.S. President Donald Trump took power.