FTX CEO SBF Supports The Proposal to Do “Knowledge Test” to Protect Small-scale Investor
FTX CEO Sam Bankman-Fried (SBF) is supporting a proposal from Commodity Futures Trading Commission (CFTC) Commissioner Christy Goldsmith Romero to protect small investors.
The Proposal
Romero wants the agency to adopt a new definition of a retail investor that will provide more protections and limits to regular crypto traders compared to institutional investors.
According to her, it could be used for weighing regulations related to how investors use leverage.
As lawmakers call for the CFTC to oversee crypto spot trading in the country, her proposal comes as a response to their call.
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“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,” she said on her Twitter account.
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
FTX Sam Bankman-Fried’s (SBF) Response
In Bankman-Fried’s view, knowledge tests and disclosures are appropriate, but they don’t necessarily have to be related 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,” he said.
Another Twitter user also commented on the FTX CEO SBF post, saying “I agree, this makes sense, and is a simple (ideally) way for companies to shield themselves from liability. Also, this offer stands 🤙.”
I agree, this makes sense, and is a simple (ideally) way for companies to shield themselves from liability. Also, this offer stands 🤙 https://t.co/wjX28Jfb2t
— VanBrooks.algo (@Royal0ui) October 15, 2022
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A Future Commissions Merchant (FCMs) is an entity regulated by the CFTC that accepts or solicits orders on futures and futures options contracts, while a Designated Contract Market (DCMs) offers derivative products such as futures and options.
A margin trade application from FTX US that will allow customers to bypass FCMs is currently being reviewed by the CFTC.
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