Christy Goldsmith Romero, the Commissioner of the Commodity Futures Trading Commission (CFTC) highlighted the collapse of the Terra ecosystem and its consequences.
He cited the collapse as an example of the risks of contagion in the crypto markets is similar to what people part of the traditional finance (TradFi) system had experienced during the global financial crisis in 2008.
The risks
On October 26th, Romero gave a speech at the crypto forum of the International Swaps and Derivatives Association (ISDA).
During the speech, the commissioner said that the increased links between the traditional financial system and the crypto markets had increased the risk to the overall stability of the financial system due to the crypto market.
Romero said that the digital asset market is still relatively small and does not have the systemic risk of the same level that would be associated with greater interconnections with the traditional financial system.
However, the commissioner asserted that this may not be the situation in the future because traditional finance is taking a growing interest in the crypto space.
Romero wants at least one area of TradFi to remain at a distance from the crypto market and that is pension and retirement funds.
Retirement and pension funds
This opinion of the CFTC commissioner is probably influenced due to the recent events that have occurred in the United Kingdom.
The Bank of England (BoE) had been required to intervene in the issue of pension funds. The commissioner said that the investment in retirement and pension funds is a cause of major concern.
Romero said that there is no need for the United States to rush into developing crypto regulations, but she said that the crypto industry carries a high level of risk.
Therefore, she said that Congress can provide the CFTC with additional authority because that would help them in addressing the financial stability risks associated with Crypto.
The crisis
The global financial crisis occurred in 2008 because banks had been lending recklessly to those people who did not have the resources to pay back their mortgages fully.
They bundled these ‘subprime’ mortgages together and sold them as safe investment products. Eventually, defaults occurred and spread across the world as a ripple effect.
The CFTC is usually considered a more crypto-friendly authority as opposed to the SEC, but it seems to be changing its stance a bit because it wants to have greater regulatory oversight.
The regulatory body revealed that it had carried out a total of 18 enforcement actions on the crypto sector throughout the fiscal year of 2022.
One of the latest actions that CFTC had taken was the fine that it had levied on the Ooki DAO, along with its members.
A commissioner of the CFTC had criticized it heavily, along with some members of the crypto community.
Before this had occurred, people had regarded these DAOs as ‘above the law’ and to limit liability, legal entities had been formed within DAOs.
James Thompson 
Michael Rafael