The ongoing United States cryptocurrency sector regulation debate has significantly narrowed down to managing stablecoins, especially after the infamous Terra (LUNA) ecosystem collapse. Although the general consensus is pushing for new comprehensive laws to manage stablecoins, a section of stakeholders believe existing financial laws will be sufficient.
In particular, former Commodity Futures Trading Commission (CFTC) chair Timothy Massad suggested that if regulatory agencies cooperate, they can leverage the existing banking laws to oversee stablecoins, he said during an interview with Bloomberg on September 22.
According to Massad, enacting regulation is good for the sector but expressed doubt if financial players can roll out comprehensive laws. He believes regulators have a sufficient starting point to regulate stablecoins.
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“While legislation would be great, we’re not sure it will happen number one, and we’re a little concerned that it won’t be comprehensive, so what we’re saying is financial regulators today have the authorities they need to create a framework to try to bring this activity [stablecoins] within the banking perimeter. <…> It could be done today under existing law, and again we’re not against legislation,” Mossad said.
Cooperation of American regulators
Interestingly, Mossad pointed out that it is not common for American banking regulators to work together while noting that it could be a key inhibitor to attaining stablecoin regulation.
Under his proposal, the former CFTC chair pointed out that the U.S. can establish a national trust bank with a payment agency that will be tasked with regulating stablecoins. He stressed that the regulation should not operate like a normal bank.
“The point is that administratively this could be done; it would require all the bank Regulators to get together and cooperate, something that doesn’t always happen in our system,” he added.
The right agency to regulate crypto
Notably, one key obstacle facing the U.S. crypto regulation stems from the right agency to manage the sector. With a difference of opinion, who would be better between the Securities Exchange Commission (SEC) and the CFTC.
It is worth noting that the clarity on agencies involved will come out if Congress passes the comprehensive crypto bill by Wyoming Senator Cynthia Lummis.
Following the Terra collapse, the U.S. is among the jurisdictions that reacted with regulatory proposals. However, no law has been enacted on a Federal level, with only New York regulators unveiling laws to govern the stablecoin sector.
At the same time, the U.S. is awaiting the release of the House stablecoin oversight legislation that seeks to bring some clarity.
