Former CFTC president calls for more regulations on cryptocurrencies

A report published by the Brookings Institution and written by Timothy Mbadad, a member of Harvard University, calls for better regulation of cryptocurrency.

Mbadad, who chaired the US Commodity Trade Commission (CFTC) under the administration of President Barack Obama, stressed the need for regulation on digital currencies, including their use in business activities. illicit, while providing a way to reduce the risk of cyber-attacks.

In the report, Mbadad explains that the current landscape of cryptocurrency leaves the market open to fraud due to the absence of traditional norms imposed by the securities and derivatives markets, a characteristic that only investors because of the lack of protection. Mbadad also targeted cryptocurrency exchanges and their lack of supervision, which has led to repeated cases of fraud, market manipulation and conflict of interest. He went on to stress the need to regulate exchanges to minimize operational risks while putting in place investor protection measures.

"Cryptographic exchanges are not obliged to have systems that prevent fraud and manipulation, nor are there rules to prevent or minimize conflicts of interest. . Cryptographic exchanges may engage in proprietary transactions against their clients, which the New York Stock Exchange can not do. Regulations aimed at minimizing operational risks and ensuring the implementation of protection systems, as in the case of securities intermediaries and derivatives ".

The 60-page report also attacked Bitcoin's weaknesses, namely the impossibility for cryptocurrency to respect its original intent. Instead of creating trust, Mbadad wrote that Bitcoin and other crypto-currencies had created a "regulatory distraction" that had compounded the problem of lack of accountability.

The hype surrounding Bitcoin and other cryptographic badets has helped divert regulatory attention. The creators of Bitcoin promised that this would solve the "problem of trust" and reduce our dependence on centralized financial intermediaries. However, this has not reduced our dependence on financial intermediaries and has not eroded the power of our larger institutions. Indeed, cryptographic badets have created new financial intermediaries less responsible than the big banks.

The former president of the CFTC called on the US Congress powers to address the issues of cryptography market fraud, the impending cyber security problem, and the possible misuse of digital badets. Regarding the lack of regulation in cryptocurrency trading, Mbadad is not the only one advocating for a reform.

The Twins of Winklevoss, who have recently made the headlines of their comments about Facebook's stablecoin, have been a driving force for the regulation of cryptocurrency through their crypto-exchange Gemini. While the twin companies have not yet succeeded in creating the first US Securities & Exchange Commission-approved Bitcoin ETF, they believe that self-regulation and regulation are the surest way to attract investment. institutional.

However, some members of the community continued to accept the lack of regulation for the cryptocurrency sector. Although the reduced control allows manipulation and fraud, it also prevents currency projects from making concessions in their decentralization, thus fulfilling the initial promise of crypto as an alternative to the fiat managed by the government. In addition, there is concern that stricter regulation will not make the sector any different from that of traditional financial markets, including the uneven influence imposed by established banking players.