The United States Federal Government Organization, Financial Stability Oversight Council (Council), urged Congress to pass legislation for cryptocurrency spot markets.
Meanwhile, the spot market can be defined as a place where traders buy or sell assets at the current market price.
FSOC’s 2022 Annual Report
On Dec. 16, 2022 the Financial Stability Oversight Council released its 2022 annual report. It was made up of the heads of the U.S. Securities and Exchange Commission (SEC), the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board and other top regulators.
The report notes that, “Amid heightened geopolitical and economic shocks and inflation, risks to the U.S. economy and financial stability have increased even as the financial system has exhibited resilience.”
The annual report reviewed financial market developments, described potential emerging threats to U.S. financial stability, and identified vulnerabilities in the financial system. It has also made recommendations to mitigate those threats and vulnerabilities.
The Secretary of the Treasury Janet L. Yellen said “This year’s annual report highlights the resilience of the financial system in the face of significant headwinds over the past year. The Council will continue to coordinate to address the risks identified in this year’s report so that the financial system remains a source of strength for the U.S. economy.’
The Council’s recommendations in the annual report also included digital assets. As stated in the report, “the Council emphasizes the importance of agencies continuing to enforce existing rules and regulations applicable to the crypto-asset ecosystem. The Council has also identified gaps in the regulation of digital asset activities. To address these gaps, the Council recommends the enactment of legislation providing for rulemaking authority for federal financial regulators over the spot market for crypto-assets that are not securities.”
It also suggests “steps should be taken to address regulatory arbitrage, since crypto-asset entities offer services similar to traditional financial institutions but do not have a consistent or comprehensive regulatory framework.”
“An assessment should be made of whether vertically integrated market structures can or should be accommodated under existing laws and regulations. Finally, the Council recommends that Council members continue to build capacities related to data and the analysis, monitoring, supervision, and regulation of digital asset activities,” the report noted.
However, “The Council’s Report on Digital Asset Financial Stability Risks and Regulation, published in October, concluded that crypto-asset activities could pose risks to the stability of the U.S. financial system if their interconnections with the traditional financial system and their scale grow without appropriate regulation.”
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Source: https://www.thecoinrepublic.com/2022/12/18/the-urge-of-us-financial-regulators-regarding-this-legislation/