Crypto Exchanges Are Not Playing by the Rules, Says Former CFTC Chairman

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One problem with crypto is that many exchanges simply don’t play by the rules, according to the former CFTC chief. Timothy Massad noted that many exchanges do not register with the SEC and claim tokens are commodities and not securities. This reluctance to follow rules that protect customers is one of the biggest risks in the crypto space, he said. LoadingSomething is being loaded.

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The lack of regulation is not the problem with crypto, but rather the fact that exchanges are simply not following the rules already in place, according to former Commodities and Futures Trading Commission Chairman Timothy Massad.

Massad pointed to existing Securities and Exchange Commission rules to protect investors. But many crypto exchanges are simply not registered with the regulator and claim that crypto tokens are not securities, despite SEC chief Gary Gensler saying they are.

“The real problem here is that the basic standards of investor protection that we have in the securities market and the derivatives market are not being met by these trading platforms. And by that, I mean the rules that we have developed over decades to protect clients’ assets, to prevent a trading platform from operating a conflicting business and having conflicts of interest, rules prohibiting fraud and manipulation, platforms negotiation do not respect them,” he said in an interview with CNBC on Thursday.

Many crypto exchanges have claimed that cryptocurrencies are commodities, Massad said, which puts them in a regulatory loophole because there is no federal oversight of the commodity spot market.

Reluctance to follow rules for securities is a major risk for crypto trading, he added, urging regulators to enforce “common standards” for commodities and securities in the crypto space . This includes limiting the leverage of exchanges and limiting the extent to which an exchange can be involved in conflicting businesses.

“We need to have much higher standards on protecting client assets,” Massad said. “We want those that a token is a security or a commodity.”

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