The White House is reportedly set to nominate Kristin Johnson, a commissioner at the Commodity Futures Trading Commission (CFTC), to fill a top role at the US Treasury Department overseeing banks, according to a May 9 report by Bloomberg.
According to the report, Commissioner Johnson is endorsed to become the Assistant Secretary of the Treasury for Financial Institutions, with the announcement expected to be made public soon.
CFTC Commissioner Expected to Coordinate with the US SEC
If confirmed, Johnson will lead financial policies on credit unions, insurance, and consumer protection. She will work closely with the Treasury Secretary and coordinate with federal regulators and banking agencies.
The Assistant Secretary of the Treasury for Financial Institutions role has been vacant since Graham Steele’s departure in January 2024.
So far, the news of a potential crossover for Johnson has sparked concerns regarding a conflict of interest in decision-making.
Congressman Don Meuser expressed his non-approval of the switch in an X post on May 10.
He argued that the commissioner’s imminent switch raises concerns about conflicting loyalties and interests for the official, which he believes could compromise the impartiality of the CFTC as an independent agency.
Unacceptable! @CFTC Commissioner Johnson’s intended appointment to Treasury raises major concerns. Any rules she votes on at CFTC now pose a clear conflict of interest. How can we trust the integrity of our independent regulatory agencies with such blatant crossover?…
— Congressman Dan Meuser (@RepMeuser) May 10, 2024
Despite Meuser’s concerns, financial experts and observers are optimistic about Johnson’s confirmation, citing recent endorsements from influential figures such as Maxine Waters, the Congressional Black Caucus, and the top Democrat on the House Financial Services Committee.
In a letter addressed to President Biden on May 2, Waters highlighted Johnson’s notable achievements and experience, endorsing her for the role.
“In her role as a CFTC Commissioner, Commissioner Johnson has prioritized maintaining the integrity of our financial markets,” Congresswoman Waters stated. “She has pushed the Commission to adopt rigorous capital, collateral, and margin standards. Commissioner Johnson is also leading the CFTC’s work on artificial intelligence (AI) and encouraging the Commission to carefully evaluate whether existing regulation is fit-for-purpose or new regulation is required.”
Waters, who recently expressed concerns about Meta’s crypto ventures, welcomes Johnson’s nomination. She believes her “person of color” status will ensure that the US Treasury Department’s leadership reflects diversity.
Johnson’s tenure as a CFTC commissioner has been marked by her proactive stance, drawing major attention and acclaim. Last year, she presented a series of proposals to improve the CFTC’s oversight of crypto businesses.
Notably, her plan includes empowering the regulator to scrutinize businesses seeking to acquire 10% or more of a CFTC-regulated exchange or clearinghouse. More recently, Johnson lauded the Binance settlement, which she described as a template for how crypto businesses should operate in the US.
CFTC Commissioner Proposes New AI Recommendations
The report of Johnson’s nomination for the Treasury job follows the CFTC commissioner’s drive to address misuse and promote the regulation of artificial intelligence (AI).
In a speech at the Sidley Austin and Rutgers Law School Fintech and Blockchain Symposium on May 3, Commissioner Johnson proposed measures such as heightened penalties to tackle AI’s role in financial markets, including decentralized finance (DeFi).
The commissioner expressed concerns about AI in DeFi, highlighting how its integration into blockchain-based ecosystems could pose new challenges for supervision, compliance, risk management, and enforcement. She pointed out a key distinction with DeFi: its lack of a central authority, which sets it apart from traditional markets.
Johnson also suggested the creation of an “AI Fraud Enforcement Task Force” comprising attorneys and investigators from various departments within the CFTC’s enforcement division and an inter-agency task force involving other regulators like the Federal Reserve and the Securities and Exchange Commission.