The US Commodity Futures Trading Commission (CFTC) has introduced a new initiative aimed at expediting the resolution of investigations concerning minor compliance violations that have not resulted in customer harm. This move is designed to reallocate the agency's resources towards more significant issues such as market abuse and fraud.
Acting Chairman Caroline D. Pham announced that the CFTC's Division of Enforcement will invite market participants who have self-reported minor compliance violations—specifically those not involving customer harm, market abuse, transparency concerns, or fraudulent conduct—to:
Provide Updates: Detail the remediation efforts and improvement plans implemented since the self-reporting.
Submit Settlement Offers: Within two weeks, present reasonable settlement proposals for consideration.
The Division will evaluate these submissions and, based on civil monetary penalties imposed for similar conduct over the past decade, propose expedited settlements with appropriate penalties tailored to the specific circumstances of each case.
The proposal follows Ms Pham's previous announcement that the CFTC will move away from regulation by enforcement.
The CFTC is strengthening its enforcement program to focus on victims of fraud, as well as remaining vigilant for other violations of law. This simplified structure will stop regulation by enforcement and is more efficient.
This initiative aligns with a broader shift in the US regulatory landscape, particularly concerning the cryptocurrency sector. The Securities and Exchange Commission (SEC) has recently dismissed several high-profile investigations and enforcement actions against major crypto companies, including Coinbase, OpenSea, Robinhood, Uniswap, and Gemini, signaling a shift towards a more balanced regulatory approach that emphasizes transparency and fraud prevention over a focus on defending the existing regulatory perimeter.
The CFTC's effort to quickly resolve minor compliance issues reflects a broader strategy to enhance regulatory efficiency and focus on more severe violations that pose significant risks to market integrity. While the regulator previously sought enforcement action against Binance, its stance against crypto has progressively softened, recently settling charges with Uniswap and even calling on Congress for crypto regulation.
This development marks a further shift from regulation by enforcement to a more collaborative approach focused on regulatory reform and fraud, which seeks to foster innovation while maintaining market integrity.
By Steven Pettigrove and Luke Misthos
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