According to a report that was unanimously adopted at the Financial Stability Oversight Council (FSOC) meeting on Monday, top US financial regulators have warned of dangerous loopholes in cryptocurrency oversight.
US Financial Stability Oversight Council Supports CFTC Oversight of Non-Securable Cryptocurrencies Like Bitcoin
Institution from Congress, bitcoin and other non-secure tokens, it seeks more authority, including determining which agency oversees the trading of tokens.
The council’s report points to some of the unregulated dangers in the digital assets industry, including the spot market for Bitcoin.
These latest recommendations from the group, led by Treasury Secretary Janet Yellen, effectively support two leading cryptocurrency regulatory initiatives: the first is a bill that would task the Commodity Futures Trading Commission (CFTC) with overseeing this spot market, and the second is the rules for stablecoin issuers. another draft law.
“Without adequate regulation, innovation can lead to significant disruptions,” Yellen said during the council’s meeting, adding that the report “identifies a number of existing gaps in regulation” and finds that crypto assets “may pose a risk to financial stability.”
“Cryptocurrency Trading Needs a Spot Controller”
According to a staff presentation at the meeting, the 125-page FSOC document highlights the need for a spot market monitor of potential fraud and manipulation in crypto trading.
Laws in both the Senate and the House will place the CFTC in this role, but bills leave the Securities and Exchange Commission (SEC) the power to decide which tokens are “securities” over which they have jurisdiction.
The FSOC, whose members include the heads of financial institutions such as the FED, SEC and CFTC, is preparing to recommend that US regulators reach every corner of digital companies.
The report will argue that the Fed should be able to audit not just one crypto firm, but also all of its subsidiaries and key service providers, as it can when it audits Wall Street banks, and Congress will be asked to grant that mandate.
As expected, the report called on Congress to “create a comprehensive federal enforcement framework for stablecoin issuers,” urging regulators to cryptocurrency It will allow it to build firewalls around tokens that are vital to trading and future payment ideas.
Joe Biden Asked His Subordinates to Prepare Reports on Cryptocurrencies
This is the latest document, and one of the most anticipated, to emerge from US President Joe Biden’s presidential order calling on federal regulators to make plans to oversee the cryptocurrency industry.
While the FSOC reiterates that US financial regulators have powers that reach much of the industry, the report’s recommendations are largely based on Congressional involvement and resolving many of the government’s shortcomings.
However, the current term of Congress is coming to an end, and members of Congress will turn their attention to the midterm elections next month that will reshape Congress.
SEC Chairman Gary Gensler said:
“Regardless of what the cryptocurrency industry initially expected, or what some market participants are saying today, cryptoassets cannot exist outside of our public policy frameworks.
Whether you call something a crypto token, stablecoin, or decentralized finance platform (DeFi), these public policy goals do not change.”
Gensler also added that policies should protect consumers and financial stability while also shielding against illegal activity.
*Not investment advice.
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