Former CFTC Chairman Calls For Regulation of Crypto Lending Platforms

According to a recent interview, former Commodity Futures Trading Commission (CFTC) Chairman Timothy Massad feels there should be more effective regulation for lending platforms across the crypto and Defi industry. "A lot of people have losses who didn't understand the risks they were taking," Massad asserted on CoinDesk's "First Mover" program.

Massad has been calling for regulation since at least early 2019, judging from a report he published in March of that year titled "It's time to strengthen the regulation of crypto-assets." The report says, "Existing law is inadequate," referring to the entire industry as having a high "Risk of Fraud, Failures, and Manipulation."

His opinion does not appear to have changed, saying there significant "areas of concern" for lending platforms whenever a considerable amount of leverage and lending is involved, and then prices stop rising. 

This is coming in lew of the Celcius shutdown of crypto-related withdrawals. Following the shutdown, he said, "I think the people running Celsius had their heads in the sand." 

Celsius has also raised concerns while borrowing $1 Billion from Tether, the creator of the USDT stablecoin. When questioned if the billion-dollar transaction violated security law, Massad said that "it's hard to make a judgment" due to Tether's lack of transparency.

Massad then said he feels there is a need for stable coins backed by high liquid assets, such as cash or Treasurys, but regulation is required.

"That's where I think we need a bank-like framework," Massad said. "I think we know how to do that. I think it's possible under existing law." He concluded the interview by saying, "We need a framework of reasonable regulation for crypto that can support innovation and that gives people confidence that they know what they're investing in if they choose to invest." "It'll help ferret out the meaningful, sensible innovations from the scams."

Author: Garrett Meifert

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