Republican lawmakers have sent a letter to U.S. Treasury Secretary Janet Yellen seeking answers on how the Financial Stability Oversight Board, which she leads, should determine how cryptocurrencies should be defined at the federal level.
Lawmakers asked Yellen about coordination between the Securities and Exchange Commission and the Commodity Futures Trading Commission. CFTC Chairman Rostin Behnam and SEC Chairman Gary Gensler are members of the FSOC, which is tasked with monitoring the stability of the financial system.
FSOC noted existing regulatory gaps in the digital asset spot market, according to its 2022 report. reportRecommended legislation was passed to give financial regulators rule-making authority for spot markets.
““Despite identifying these gaps, regulators have failed to ensure consumer protections and create an environment that fosters digital asset innovation in the United States,” lawmakers said in a statement Tuesday.
House Financial Services Committee Chairman Patrick McHenry of North Carolina, House Agriculture Committee Chairman Glenn “GT” Thompson of Pennsylvania, Representative French Hill of Arkansas, and Representative Dusty Johnson of South Dakota signed the letter.
They asked Yellen about the FSOC’s views on how securities laws apply to “crypto asset issuers,” citing last year’s court case involving Ripple Labs and the SEC. New York judge rule Last July, it ruled that while some of Ripple’s XRP sales did not violate securities laws due to a blind bidding process, other direct sales of the token to institutional investors were in fact securities.
Lawmakers also asked whether the FSOC believes that neither Bitcoin nor Ethereum are securities and whether it would be appropriate to extend the CFTC’s jurisdiction to the spot market. They said they wanted a response by February 20th.
The four co-signers are also leading efforts for legislation called the 21st Century Financial Innovation and Technology Act, which would take a comprehensive approach to cryptocurrency regulation. It essentially provides new capabilities to the CFTC. authorities Although some people have yet to get the support they need for cash markets. Bill “The wish list of big cryptocurrencies.” Lawmakers on Tuesday said the bill would close the gaps cited by FSOC.
Yellen on Capitol Hill
Yellen testified before the House Financial Services Committee on Tuesday and again called on Congress to pass legislation to regulate cryptocurrency spot markets rather than stablecoins and securities.
“While there are many areas where we have clear regulatory authority regarding digital assets, we have identified several gaps where it would be very useful for Congress to take action to address consumer investor protection and financial stability risks.” Yellen said.
This is a regulatory gap, Yellen said, because the CFTC does not have regulatory authority over spot markets.
The Treasury Secretary has zeroed in on stablecoins and said they pose risks to the financial system.
“We very much welcome Congress’s efforts to establish a regulatory framework appropriate to address these risks,” Yellen said.
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