US Treasury recommends lawmakers decide which regulators will oversee crypto spot market
Officials with the United States Financial Stability Oversight Council, or FSOC, have recommended U.S. lawmakers pass legislation to determine which “rulemaking authority” will be responsible for regulating parts of the crypto spot market.
In an Oct. 3 meeting of the FSOC, Jonathan Rose, a senior economist at the Federal Reserve Bank of Chicago, said the FSOC had released a report in accordance with President Joe Biden’s executive order on crypto, detailing potential financial stability risks of digital assets and regulatory gaps. The report identified regulatory gaps including the spot market for cryptoassets that were not securities subject to “limited direct federal regulatory” — hinting at lawmakers stepping in to prevent possible market manipulation and conflicts of interest.
“While some firms in the crypto asset ecosystem have attempted to avoid regulation, other firms have engaged with the existing regulatory system by obtaining trust charters or special state-level cryptoasset-specific charters or licenses,” said Rose. “The report recommends the passage of legislation in providing a rulemaking authority for federal financial regulators over this [spot] market.”
According to Rose, cryptocurrencies could present financial stability risks to the U.S. economy “under certain conditions” — including growth without corresponding regulatory checks and balances. He also mentioned crypto firms operating through affiliates or subsidiaries, seemingly obfuscating offerings in the eyes of regulators, and whether companies should be allowed to offer services through intermediaries, including “broker dealers and futures commission merchants.”
In a prepared statement for the council meeting, Treasury Secretary Janet Yellen said:
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