Regulators in the US called for tighter licensing at today’s meeting of the Financial Stability Oversight Council. However, the Biden administration pointed to the collapse of crypto exchange FTX. He also urged Congress to immediately close the loopholes in cryptocurrency regulation. Here are the details…
The current status quo is insufficient
The SEC has been studying cryptocurrencies for a very long time. As we reported on Kriptokoin.com, in the process, the SEC claimed that many cryptocurrencies are securities. Crypto exchanges in the US currently operate through various state money transmitter licenses. So they don’t have a crypto exchange license yet. The SEC chairman said in a statement:
It is crucial to regulate brokers as well as issuers of crypto security tokens. Nothing about crypto markets is compliant with securities laws, but the risk from this speculative, volatile, and largely non-regulatory market, which I believe is not compliant with our current laws, puts investors at risk.
Rohit Chopra, director of the Consumer Financial Protection Bureau, pointed to the recent collapse of giant cryptocurrency exchange FTX. Chopra said the current crypto status quo is inadequate, especially for those holding customer deposits without insurance from the Federal Deposit Insurance Corporation. However, Chopra noted:
It is crucial to regulate brokers as well as issuers of crypto security tokens. Nothing about crypto markets is compliant with securities laws, but the risk from this speculative, volatile, and largely non-regulatory market, which I believe is not compliant with our current laws, puts investors at risk.
Authorities are calling for cryptocurrency regulations
The Financial Stability Oversight Council, chaired by Treasury Secretary Janet Yellen, recommended that Congress introduce some rules for the crypto industry. He said that attempts should be made to ensure that the sanctions imposed on traditional financial firms are also provided for cryptocurrencies. The links of crypto assets with the traditional financial system are quite limited for now. However, policy makers warned that this link could increase rapidly. In addition, regulators said that crypto investor protection is related to financial stability and national security.
The Biden administration has also called for audits for crypto firms. Investigations carried out in the USA following the collapse of FTX are a continuation of this call. The requested sanctions include cryptocurrencies regulated by the SEC that do not meet the definition of a security. However, it also calls for a comprehensive control over all crypto-related entities. The confusion of authority is also the biggest obstacle to the implementation of the desired sanctions. Many institutions in the US are seeking authorization over cryptocurrencies.
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