CFTC commissioner compares crypto contagion risk to 2008 financial crisis

cointelegraph.com:

Commodity Futures Trading Commission’s (CFTC) Christy Goldsmith Romero has pointed to the collapse of the Terra ecosystem and its flow-on effects as an example of how contagion risks within crypto markets are similar to those experienced by the traditional financial (TradFi) system during the global financial crisis (GFC) of 2008. 

Romero suggested in a speech given at the International Swaps and Derivatives Association’s (ISDA) Crypto Forum on Oct. 26 that increased links between crypto markets and TradFi increases the risk posed by crypto to overall financial stability, noting:

One area of TradFi the commissioner would prefer to remain distant from crypto is retirement and pension funds, an opinion which has likely been influenced by recent events in the U.K. where pension fund issues required intervention from the Bank of England.

I have significant concerns about the possibility of pensions and retirement funds investing in #Cryptocurency

While Romero cautions the U.S. not to rush regulations, she supports a “same risk, same regulatory outcome” approach as the level of risk posed by the crypto industry increases, suggesting:

The GFC came about after banks began to lend recklessly to people without the means to fully pay back their mortgages. These ‘subprime’ mortgages were bundled together and sold as safe investment products before defaults started a ripple effect that spread across the world.

Related: ‘Secretly circulating’ draft crypto bill could be a ‘boon’ to DeFi

While the CFTC is often regarded as the more crypto-friendly regulator compared to the Securities and Exchange Commission (SEC), it appears to be attempting to change that image as part of its bid to gain more regulatory oversight after revealing it