As the United States engages in debate to regulate cryptocurrencies, Congress has emerged as a critical player in rolling out the necessary laws. Notably, several crypto regulation-related bills have been presented before lawmakers.
In this line, the Financial Stability Oversight Council (FSOC) has called on Congress to pass the necessary legislation to regulate crypto and alleviate any financial risks posed by the sector, Reuters reported on October 3.
Notably, the FSOC, which comprises leading United States regulators, identified critical gaps in the regulations of cryptocurrencies that Congress can help address.
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According to the panel, the laws should address limited oversight of the spot market for tokens not classified as securities, opportunities for regulatory arbitrage, and a stand on whether crypto firms should have the approval to integrate different services in the past offered by intermediaries.
Federal financial regulator for crypto
FSOC opines that there is a need to handle the issue of conflict of interest and abusive trading practices by passing a law that provides rulemaking authority to federal financial regulators. At the same time, the panel recommended the establishment of an authority to supervise the activities of crypto firms.
Furthermore, FSOC urged Congress to create a federal framework for stablecoin issuers and address issues like market integrity and consumer protection. Notably, the push toward crypto regulations escalated in mid-2022 after the infamous Terra (LUNA) ecosystem crash.
In reaction to the recommendation by the FSOC, United States Treasury Secretary Janet Yellen said the group is offering a strong foundation for policymakers as they work towards minimizing financial stability risks.
White House crypto framework
The panel’s recommendations are in line with President Joe Biden’s Executive Order directing Federal agencies to study the development of cryptocurrencies. The order has culminated in releasing the first-ever White House crypto regulation framework that called for enacting laws to protect consumers. The White House noted that cryptocurrencies pose a significant risk to consumers.
It is worth noting that Congress is currently debating several bills aimed at regulating crypto, with some solely focusing on stablecoins. Among the bills is the comprehensive crypto regulation draft proposal presented by Bitcoin-friendly Wyoming senator Cynthia Lummis.
