The U.S. Treasury Department’s Financial Stability Oversight Council (FSOC) has recommended that regulators continue to “enforce existing rules and regulations applicable to the cryptoasset ecosystem.”
SEC Chairman Gensler speaks out on the regulation of crypto-currencies.
SEC Chairman Gary Gensler spoke about the regulation of crypto-currencies on Friday in his remarks before the U.S. Treasury Department’s Financial Stability Oversight Council (FSOC). Gensler stated:
There is nothing about the crypto markets that is inconsistent with securities laws. Yet the risks associated with this speculative, volatile and, in my opinion, largely non-compliant market put investors at risk.
“This is why it is so important to bring crypto-currency token intermediaries and issuers into compliance“, he stressed.
“While the risks of the crypto-currency markets do not appear to have spread to the traditional financial sector to date, we must remain vigilant to guard against this possibility“, the SEC chief concluded.
Gary Gensler and the SEC have been criticized for not preventing the collapse of the crypto exchange FTX given that SEC staff, including the chairman himself, had several meetings with former FTX CEO Sam Bankman-Fried (SBF). The securities watchdog finally charged Bankman-Fried and his crypto exchange with fraud last week after his arrest in the Bahamas. U.S. Congressman Tom Emmer has asked Gensler to testify before Congress about the cost of his failures to regulate crypto-currencies.
Financial Stability Oversight Council recommendations on crypto-currency regulation.
The Financial Stability Oversight Council also unanimously approved its 2022 annual report on Friday. In his remarks, Gensler said he supported the FSOC report, including its recommendations. According to the U.S. Treasury Department’s announcement of the report:
The Council emphasizes the importance of the agencies continuing to enforce existing rules and regulations applicable to the cryptoasset ecosystem.
Noting that the Council identified gaps in the regulation of crypto-currency activities, Treasury explained that to address these gaps, the Council recommended “The enactment of legislation providing regulatory authority for federal financial regulators in the cash market for crypto assets that are not securities“. In addition, Treasury noted, “Steps should be taken to address the problem of regulatory arbitrage, given that cryptoasset entities offer similar services to traditional financial institutions but lack a consistent or comprehensive regulatory framework.“
Last week, two U.S. senators, including Elizabeth Warren (D-MA), introduced a bipartisan bill for the regulation of crypto-currencies. Their bill, entitled “Digital Asset Anti-Money Laundering Act“, is “the most direct attack on the personal freedom and privacy of crypto-currency users and developers that we have ever seen“, according to crypto-currency advocates.