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Source: Сointеlеgrаph

Officials from the U.S. Financial Stability Oversight Council, or FSOC, have recommended that U.S. lawmakers enact legislation to determine which “rule-making body” will be responsible for regulating parts of the cryptocurrency spot market.

At the October 3 FSOC meeting, Jonathan Rose, Senior Economist at the Federal Reserve Bank of Chicago, said the FSOC released a report in accordance with President Joe Biden’s crypto executive order, detailing the potential financial stability risks associated with digital assets. and regulatory gaps. The report identified regulatory gaps, including the spot market for crypto assets that are not securities subject to “limited direct federal regulation,” hinting at lawmakers intervening to prevent potential market manipulation and conflicts of interest.

“While some firms in the crypto asset ecosystem have tried to avoid regulation, other firms have interacted with the existing regulatory system by obtaining trust charters or special charters or licenses for state-level crypto assets,” Rose said. “The report recommends legislation to give federal financial regulators the power to rule on this [spot] market.”

Cryptocurrencies could pose risks to the financial stability of the US economy “under certain conditions,” Rose said, including growth without appropriate regulatory checks and balances. He also mentioned crypto firms operating through affiliates or subsidiaries that appear to confuse offerings in the eyes of regulators, and whether companies should be allowed to offer services through intermediaries, including “broker dealers and futures commission traders.”

In a prepared statement to the council meeting, Treasury Secretary Janet Yellen said:

“These reports provide a solid basis for policy makers as we work to mitigate the risks of digital assets while realizing the potential benefits. They also provide a valuable addition to the public’s understanding of digital assets.”

The council’s recommendations appear to suggest that the Commodity Futures Trading Commission, or CFTC, may be one of the regulators with power over the spot market for cryptocurrencies. US lawmakers have already introduced bills aimed at clarifying the role of the Securities and Exchange Commission and the CFTC in relation to cryptocurrencies. Many in the space have also criticized the two bodies for taking a “regulation by enforcement” approach to digital assets, apparently in an attempt to gain regulatory control of the market without passing legislation through Congress.

Related: Blockchain Association Calls White House Crypto Structure ‘Missed Opportunity’

On October 3, the SEC announced that it was charging celebrity Kim Kardashian $1.26 million for “social media ads for the security of crypto assets offered and sold by EthereumMax,” without disclosing any payments she received for the promotion. In May, a federal court ordered three co-founders of cryptocurrency derivatives exchange BitMEX to pay $30 million in civil monetary penalties in a CFTC case in which the regulator said the individuals violated aspects of the Commodity Exchange Act.

Source: Сointеlеgrаph

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