The U.S. Financial Stability Oversight Council (FSOC), a group of the country’s top financial regulators, has urged Congress to pass legislation for the regulation of crypto assets. Treasury Secretary Janet Yellen said: “Crypto-asset activities could pose risks to U.S. financial stability if their interconnections with the traditional financial system or their overall scale were to grow without adherence to or being paired with appropriate regulation, including enforcement of the existing regulatory structure.”
U.S. Financial Stability Oversight Council’s Recommendations
The U.S. Financial Stability Oversight Council (FSOC) published its “Report on Digital Asset Financial Stability Risks and Regulation” Monday. Ten recommendations are included in the 124-page document for regulation of crypto assets.
The FSOC, chaired by the Treasury Secretary, is a group of the country’s top financial regulators. The FSOC is comprised of five voting members and 10 non-voting members. It includes the Treasury Secretary and the Chairman of the Federal Reserve, the Comptroller of the Currency, the Comptroller of the Currency, the Comptroller of the Currency, the chairman of the Securities and Exchange Commission and the chairman of the Commodity Futures Trading Commission.
Treasury Secretary Janet Yellen described at the FSOC meeting Monday that the report “identifies a number of material gaps in current regulation, and recommendations to address these gaps.”
Firstly, the council recommends that member agencies should consider general principles when dealing with crypto assets, such as “same activity, same risk, same regulatory outcome” and “technological neutrality.” Regulators should also “continue to enforce existing rules and regulations” and “coordinate with each other in the supervision of crypto-asset entities.”
A second recommendation is:
Council suggests that Congress passes legislation that grants federal financial regulators specific rulemaking authority over spot markets for cryptocurrency-assets not classified as securities.
The council also urged Congress to “pass legislation that would create a comprehensive federal prudential framework for stablecoin issuers that also addresses the associated market integrity, investor and consumer protection, and payment system risks.”
Moreover, council members should “continue to build their capacity to analyze and monitor crypto-asset activities and allocate sufficient resources to do so.” The report further details:
It is also recommended that Congress provide the necessary funds to members agencies for surveillance and regulation of cryptoasset activities.
Citing the FSOC report, Yellen noted: “Crypto-asset activities could pose risks to U.S. financial stability if their interconnections with the traditional financial system or their overall scale were to grow without adherence to or being paired with appropriate regulation, including enforcement of the existing regulatory structure.”
Federal Reserve Chairman Jerome Powell said at the FSOC meeting, “I support this report and its recommendations,” elaborating:
For digital assets to be considered risky, it’s important to have a sound prudential plan. It is important to act now in order to encourage responsible innovation, while maintaining financial stability.
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