The Financial Stability Oversight Council (FSOC), a group of top U.S. financial regulators, urged Congress to pass legislation to regulate crypto assets. Treasury Secretary Janet Yellen stated that ” Crypto asset activity could pose a risk to U.S. financial stability if its interconnection with the traditional financial system or its overall size grows without or paired with compliance with appropriate regulations, including enforcement of existing regulatory structures.”
Recommendations of the U.S. Financial Stability Oversight Council
The U.S. Financial Stability Oversight Council (FSOC) on Monday released its “Report on Financial Stability Risks and Regulation of Digital Assets,” a 124-pagereportwhich includes 10 recommendations for the regulation of crypto assets.
Chaired by the Secretary of the Treasury, the FSOC is a group of the nation’s top financial regulators, consisting of 10 voting members and 5 non-voting members. Voting members include the Secretary of the Treasury, the Chairman of the Federal Reserve Board, the Office of the Comptroller of the Currency (OCC), the Chairman of the Securities and Exchange Commission (SEC), and the Chairman of the Commodity Futures Trading Commission (CFTC).
Treasury Secretary Janet Yellen explained at Monday’s FSOC meeting that the report “identifies a number of significant gaps in current regulation and recommendations to address these gaps.”
First, the Council recommends that member agencies consider general principles when dealing with crypto assets, such as “same activities, same risks, same regulatory outcomes” and “technology neutrality.” In addition, regulators should “continue to enforce existing rules and regulations” and “coordinate with each other in the supervision of crypto asset entities.”
Another recommendation states.
The Council recommends that Congress pass legislation providing clear rulemaking authority for federal financial regulators regarding the physical market for crypto assets that are not securities.
The Council also urges Congress to “pass legislation to establish a comprehensive federal prudential framework for stablecoin issuers that also addresses relevant market integrity, investor and consumer protection, and payment system risk.”
In addition, the board should “continue to build capacity to analyze and monitor crypto asset activity and allocate sufficient resources to do so.” The report further elaborates.
The Council also recommends that Congress allocate the necessary resources to member agencies for the oversight and regulation of crypto asset activities.
Citing the FSOC report, Yellen noted that. “Crypto asset activity could pose a risk to U.S. financial stability if its interconnection with the traditional financial system and its overall size grows without or paired with compliance with appropriate regulations, including enforcement of existing regulatory structures.” And.
Federal Reserve Chairman Jerome Powell elaborated at the FSOC meeting, saying, “I support this report and its recommendations.”
It is important to establish a thorough prudential framework to address the risks of digital assets. By acting now, we can support responsible innovation while maintaining financial stability.
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