Christy Goldsmith Romero, Commissioner of the United States Commodity Futures Trading Commission (CFTC), urged regulators to modernize investor protection measures by leveraging technological advances. Speaking at the North American Securities Administrators Association’s annual meeting, Romero emphasized that failure to keep pace with technology could adversely affect vulnerable investors. She stated that as regulators make policy decisions on next-generation technology, a foundational understanding of the technology and its implications for finance and law is critical.
Romero spearheaded the effort to enhance investor protections by appointing technology experts in fintech, responsible artificial intelligence, cryptocurrency, blockchain, and cybersecurity to the CFTC’s Technology Advisory Committee (TAC). The committee has been tasked with identifying ways to integrate Know Your Customer (KYC) and Anti-Money Laundering (AML) processes into decentralized finance and crypto investment avenues.
The role of technology in regulatory enforcement
Romero also highlighted the evolving nature of federal crypto investigations, which have shifted from primarily backtracking trade activities to monitoring social media platforms. She recommended that regulators should use a variety of tools, including tracing funds, using blockchain, link analysis, and data analytic tools, to aid their investigations. Statements shared on social media platforms could serve as strong evidence of intent, Romero added. She further proposed that these platforms could be used by regulators to issue warnings about scams and protect investors.
To mitigate the damages caused by financial fraud, Romero re-proposed the formation of the National Financial Fraud Registry. This centralized record of all crimes and fines related to financial fraud would enable investors to conduct background checks on companies for any ongoing investigations or fines for fraud. Romero first proposed the creation of this registry in December 2019 and believes that such a one-stop-shop platform could help investors deter financial fraud.
In conclusion, Romero stated that federal and state officials could work together to improve investors’ safety by harnessing the best of technology while protecting investors and financial stability. The commissioner’s remarks come at a time when the role of technology in financial markets is under intense scrutiny, and her proposals could set the stage for a more secure and transparent financial ecosystem.