The FSOC reported that problems at FTX "precipitated price reductions in Bitcoin and other crypto-assets," but they "had a minimal influence on the larger U.S. financial system."
Why take action now?
Officials from the Financial Stability Oversight Council of the United States, or FSOC (1), have advised American legislators to pass legislation to close regulatory gaps for crypto-related activity. The FSOC recommended that Congress pass legislation giving "explicit rulemaking authority for federal financial regulators over the spot market for crypto-assets" in its annual report, which was made public on Dec. 16. Tokens that had previously been classified as securities would be exempt, the FSOC noted. The council also raised concerns about stablecoins and the lack of oversight and visibility of crypto companies, given the current legal environment. in the United States.
The FSOC used the recent failure of the cryptocurrency exchange FTX as background material when advising measures on digital assets. The council said that although FTX-related problems "precipitated price reductions in Bitcoin and other crypto-assets," they "had a minimal influence on the larger U.S. financial system."
What experts think of this decision
Gary Gensler, chairman of the Securities and Exchange Commission, commented on the FSOC study, saying that risks from this speculative, volatile, and, in my opinion, mostly noncompliant market put investors at risk. This is why bringing intermediaries and issuers of cryptocurrency security tokens into compliance is crucial. (2) Even though it doesn't seem like the risks from the cryptocurrency markets have yet affected the traditional financial industry, we must continue looking for potential threats.
The FSOC's October legislative recommendations, which the council issued in compliance with U.S. President Joe Biden's executive order on cryptocurrency, were reinforced in the annual report. The SEC and the Commodity Futures Trading Commission have both argued in favor of their respective agencies taking the lead in regulating digital assets in the United States at the time of publication. Still, the report did not appear to make any recommendations as to which body should do so upon instructions from Congress.