The United States Government Accountability Office (GAO) has recently unveiled a report, commissioned by Rep. Maxine Waters (D-Calif.) and Rep. Stephen Lynch (D-Mass.) of the Financial Services Committee, which sheds light on a pressing regulatory gap concerning crypto assets.
The report urges federal regulators to adopt a unified, comprehensive approach to address this critical issue.
Identifying the Regulatory Gap
The comprehensive report highlights a glaring problem – there is currently no federal financial regulator vested with the authority to oversee the spot market for crypto assets that are not classified as securities. This regulatory void poses significant challenges for ensuring the stability and security of the burgeoning crypto market.
To bridge this regulatory gap, the GAO suggests the establishment of a formal coordination mechanism among federal financial regulators. Such a mechanism would enable these regulators to collectively identify risks associated with blockchain-related assets and respond promptly with appropriate measures.
The Treasury’s Role
Taking a proactive stance, the Treasury’s Financial Stability Oversight Council has been entrusted with spearheading the development of a unified approach to overseeing crypto assets. This initiative stems from a March 2022 Executive Order, underlining the government’s commitment to addressing this issue.
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Stablecoins’ Regulatory Quandary
Of particular concern in the report is the regulatory authority over stablecoins, where the fragmented U.S. financial regulatory structure has become evident. The lack of uniform standards regarding reserve levels and public disclosure of reserves poses significant challenges. To remedy this, the report recommends regular audits and public disclosure of reserve assets and audit results. Additionally, the establishment of a robust legal framework regarding redemption rights is seen as crucial in addressing this concern.
So… What’s the Solution?
To effectively tackle these challenges, the report proposes that major U.S. financial regulators, including the Consumer Financial Protection Bureau (CFPB), the Commodity Futures Trading Commission (CFTC), the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve System, the National Credit Union Administration (NCUA), the Office of the Comptroller of the Currency (OCC), and the Securities and Exchange Commission (SEC), should establish or adapt an existing formal coordination mechanism. By fostering a collaborative approach, regulators can promptly identify and respond to risks associated with blockchain-related products and services.
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Source: https://coinpedia.org/news/bridging-the-crypto-oversight-gap-us-accountability-office-calls-for-federal-regulators/