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On Wednesday, a senior CFTC official will caution legislators against enabling cryptocurrency exchanges to self-certify with the organization in order to offer items for trade.

The CFTC currently permits exchanges to self-certify in order to offer contracts for other items, such commodities. A similar procedure was under consideration by lawmakers as part of the draft crypto legislation they worked on last year.

However, CFTC Commissioner Christy Goldsmith Romero warned that the procedure might encourage "regulatory arbitrage" since certain cryptocurrencies may really be securities that need regulation by the Securities and Exchange Commission (SEC).

Speaking at a gathering at the University of Pennsylvania, she said that "oversight is essential to avoid misuse" of the procedure.

Her comments come as legislators reassemble to create laws to properly regulate the struggling cryptocurrency sector, which has been reeling since FTX's abrupt collapse and suspected fraud last year.

Romero also questioned how much research companies did before investing in FTX, speculating that there could be incentives "to turn a blind eye" to warning signs in a cutthroat industry.

Three of FTX's former senior executives have been charged by federal authorities with misleading investors and stealing customer monies.

According to two persons familiar with the investigation, the SEC is also looking into the due diligence of FTX investors.

The crypto business should establish robust corporate governance and expand the responsibilities that gatekeepers like attorneys and compliance specialists play at organizations in order to recover the public's confidence after the FTX catastrophe, according to Goldsmith Romero.

In the year leading up to the breakdown, "gatekeepers should have critically questioned the operating climate at FTX," she said.

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