© Jesse Hamilton , Commissioner Kristi Goldsmith Romero (Jesse Hamilton/CoinDesk)Commissioner Kristi Goldsmith Romero said the CFTC needs to rethink how it sets the rules for retail investors now that the agency appears ready to regulate spot cryptocurrency trading.
He told CoinDesk in an interview Friday that he intends to propose a new definition of the retail investor. Goldsmith Romero, who holds one of the Democrats' seats on the five-member panel, said the matter would begin with an unofficial draft posted on the agency's website requesting a review.
"Our market, which has traditionally been mostly institutional, is attracting more and more retail investors," he said.
He said the CFTC's current thinking on retail investors is "very broad", and "only includes the average person for $10 million."
The addition of new specific categories can help agencies treat regular crypto users differently than large institutions, which usually means more restrictions and protections for small investors.
“You want to make sure that you can provide retail investors with enhanced access, but in a way that is safe and convenient for them, which can be very different from how institutions or high net worth individuals can buy,” Goldsmith said. Romero.
For now, the CFTC is likely to be the primary regulator of cryptocurrency trading, according to various bills in Congress that would give it power over the spot market - or the market in which tokens are actually traded among investors. A consensus has emerged among lawmakers on both sides to give the US commodity watchdog new powers to oversee the spot market for non-exchange digital assets, including bitcoin.
Goldsmith Romero, who serves as the agency's lead advisor on the Technology Advisory Board, suggested the possibility of using the new definition of retail as the agency revises rules, for example regarding investors' use of leverage. Creating categories of retail investors, he says, can make investors "familiar" among professionals and provide them with "better consumer protection, and possibly more disclosure, written in a way that the average person can understand."
The CFTC's Securities and Exchange Commission has long maintained a flexible definition of what constitutes an "accredited investor" that is believed not to need family investor protection. Currently the minimum net worth is $1 million or $200,000 in individual income per year.
Goldsmith Romero says he wants to hear from people who have ideas or disagree with his suggestion.
“I love listening to all of this stuff to try to get it right,” he said. "I just dismiss the concept of what I don't think is entirely correct...our definition of retail is completely inaccurate." It does not work with this asset class.