FTX CEO Sam Bankman-Fried is backing an idea suggested by Commodity Futures Trading Commission (CFTC) Commissioner Christy Goldsmith Romero aimed at protecting small-scale investors.
Romero wants to adopt a new retail investor definition that would allow the agency to treat regular crypto traders differently from institutional investors and provide them with more limits and protection.
She says the idea could be used for weighing rules on the use of leverage by investors. Her proposal comes amid calls from lawmakers that the CFTC oversees spot crypto trading in the country.
Establishing a household retail investor category could give them more consumer protections. For example, disclosures written in a way that regular people understand or could be used when weighing rules on the use of leverage. https://t.co/5VWwDUc99U
— Christy Goldsmith Romero (@ChristyGRomero) October 14, 2022
Bankman-Fried says the idea of knowledge tests and disclosures makes sense, but it doesn’t necessarily have to be limited to crypto.
“100% agree on disclosures, knowledge tests, etc.
For what it’s worth, I don’t know that it necessarily makes sense to be crypto-specific – I think that having, at least, mandates for disclosures and for knowledge-based tests for all FCMs/DCMs facing retail could make sense.”
Future Commissions Merchants (FCMs) are CFTC-regulated entities that accept or solicit buy and sell orders on futures or futures options contracts. Designated Contract Markets (DCMs) are exchanges that offer derivative products such as futures and options.
The CFTC is currently reviewing an application from FTX US to offer margin trades for cryptocurrency derivatives that will allow customers to bypass FCMs.
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The post FTX CEO Sam Bankman-Fried Supports ‘Knowledge Tests’ for Retail Traders To Get Into Risky Trading Strategies appeared first on The Daily Hodl.
