Top US regulators propose new legislation and increased rules around digital assets
A panel of top US regulators wants Congress to pass laws to enable more direct supervision of cryptocurrency markets and for blanket regulation of stablecoins; According to its latest report focusing on digital assets.
The Financial Stability Oversight Board also recommended that Congress pass a law to increase the transparency of digital asset projects for various regulators; In order to allow regulators across different jurisdictions to better coordinate and understand crypto markets and activities.
Today's report identifies three loopholes in the regulatory oversight of digital assets:
- spot markets for cryptocurrencies that are not considered securities; which currently stands for bitcoin and ether - although Gary Gensler, chairman of the Securities and Exchange Commission, has questioned the latter.
- “Regulatory arbitrage” due to the complexity of crypto businesses and digital assets; which can fall in many regulatory jurisdictions.
- vertical integration of trading platforms that give retail investors direct access to the markets; which the board believes could have, “financial stability and investor protection effects”; Because of other such as automated asset liquidation, are practices of those platforms
“The Board thinks that the stability of the US financial system could be jeopardized if crypto-asset activities are connected to the existing financial system or if their overall magnitude rises.. without appropriate regulation.
Including enforcement of the existing organizational structure,” the report reads. The board singles out the bankruptcy of the hedge fund Three Arrows Capital and the collapse of TerraUSD as events indicating instability in the digital asset sector; This supports the need for legislation and increased regulation of crypto-related businesses.
The council unanimously approved the report
Congress actually began work on legalizing stablecoin and spot market earlier this year. A Biden administration official said the administration does not support specific bills to achieve these goals at this time ; But the report could add momentum to current efforts.
Senate Agriculture Committee Chair Debbie Stabeno, Michigan; Authored a bill to give the CFTC more power over non-security cryptocurrency markets. The CFTC currently has authority over derivatives and futures contracts; But not the actual spot markets for Bitcoin and Ether; They are digital assets that are not currently treated as securities.
The Chairman of the Commodity Futures Trading Commission, Rustin Benham; testifying in favor of this legislation.
which has not yet received a committee vote; Although Gensler told Congress that having so many regulators focused on cryptocurrency could undermine oversight efforts.
During today's FSOC meeting, Gensler said, "I look forward to working with Congress to achieve the policy objectives as laid forth in the report.". Consistent with maintaining the regulations on cryptocurrency and related intermediaries with the Securities and Exchange Commission.”
“I hope we don't inadvertently undermine the securities law; which forms the basis of the $100 trillion capital market.”
The work of the Chairman of the House Financial Services Committee, Maxine Waters; California MD, Republican SC Patrick McHenry; Republican-North Carolina, on a comprehensive stable bill, including a recent debate draft; Although he doesn't think they have reached an agreement yet.
And the chances of passing the law before the end of this current Congress seem slim. if the Republicans control both the House of Representatives and the Senate; Opinion polls indicate that they are favored to win the House of.
Representatives while the Senate remains frustrated; McHenry may prefer to wait until the next Congress to conclude negotiations since chairing the committee that comes with overturning the House would give him more leverage.
He also recently said that any legislation on this subject would have multiple authors from both parties; Due to the fact that control of the government would remain divided even if the Republicans took control of the House and the Senate.
Senator Pat Toomey, of the Republic of Pennsylvania, introduced the Senate Banking Committee; his own proposal earlier this year, though, as he announced his retirement from office and will leave After the conclusion of this Congress, the Senate.
The report also called on regulators to be more proactive in enforcing existing laws and directly overseeing crypto-related businesses and activities.
Especially when it intersects with the traditional financial system. This includes bank regulators using their existing authority to supervise and vet digital asset firms that partner with banks or receive state or federal bank charters.