United States Commodity Futures Trading Commission (CFTC) Commissioner Christy Goldsmith Romero has called for a modernization of protection measures using advanced technology to safeguard American investors.
Speaking at the annual meeting of the North American Securities Administrators Association in San Diego, Romero emphasized the need for government regulators to keep up with technological advancements to protect vulnerable investors.
Romero stressed the importance of regulators having a strong understanding of emerging technologies and their implications for the financial and legal sectors as they make policy decisions regarding next-generation financial technology.
In a significant move, Romero appointed technology experts in fintech, responsible artificial intelligence (AI), cryptocurrency, blockchain, and cybersecurity to the CFTC’s Technology Advisory Committee (TAC).
These experts are tasked with identifying ways to incorporate Know Your Customer (KYC) and Anti-Money Laundering (AML) processes into decentralized finance and cryptocurrency investment channels.
Furthermore, the TAC will play a crucial role in promoting responsible AI development within the financial industry, focusing on governance for decision-making that impacts investors and markets.
Romero highlighted a shift in federal crypto investigations from trade activities to monitoring social media platforms such as X (formerly Twitter), Reddit, and Facebook.
She recommended the use of tools like blockchain analysis, link analysis, and data analytics to aid these investigations.
Romero emphasized that statements made on social media platforms can serve as strong evidence of intent, and regulators can use these platforms to issue warnings about scams to protect investors.
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To combat financial fraud effectively, Romero proposed the establishment of a National Financial Fraud Registry.
This centralized database would maintain records of all crimes and fines related to financial fraud, allowing investors to conduct background checks on companies and ongoing investigations or fines related to fraud.
Romero initially proposed the registry in December 2019 to enhance investor protection.
Romero believes that this one-stop-shop platform can deter financial fraud and improve overall investor safety.
In conclusion, she emphasized that federal and state officials must work together to enhance investor protection and safety.
In April, Romero urged crypto companies to verify the digital identity of users to mitigate risks associated with anonymity.
She encouraged both exchanges and decentralized finance (DeFi) platforms to adopt digital identity verification while still providing financial privacy for customers.
This approach aligns with her commitment to enhancing investor safeguards in the rapidly evolving cryptocurrency and blockchain space.
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