US Treasury recommends lawmakers decide which regulators will oversee crypto spot market

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The US Financial Stability Oversight Council released a report that urges specifying which rule-making authority will oversee the crypto spot market regulations.

Officials with the United States Financial Stability Oversight Council, or FSOC, have recommended U.S. lawmakers pass legislation to determine which “rulemaking authority” will be responsible for regulating parts of the crypto spot market.

In an Oct. 3 meeting of the FSOC, Jonathan Rose, a senior economist at the Federal Reserve Bank of Chicago, said the FSOC had released a report in accordance with President Joe Biden’s executive order on crypto, detailing potential financial stability risks of digital assets and regulatory gaps.

“While some firms in the crypto asset ecosystem have attempted to avoid regulation, other firms have engaged with the existing regulatory system by obtaining trust charters or special state-level crypto asset-specific charters or licenses,” said Rose. “The report recommends the passage of legislation in providing a rulemaking authority for federal financial regulators over this [spot] market.”

According to Rose, cryptocurrencies could present financial stability risks to the U.S. economy “under certain conditions” — including growth without corresponding regulatory checks and balances. He also mentioned crypto firms operating through affiliates or subsidiaries, seemingly obfuscating offerings in the eyes of regulators, and whether companies should be allowed to offer services through intermediaries, including “broker dealers and futures commission merchants.

The council’s recommendations seemed to suggest that the Commodity Futures Trading Commission, or CFTC, could be one of the regulators given authority over the crypto spot market. U.S. lawmakers haveaimed at clarifying the roles of the Securities and Exchange Commission and CFTC with regard to crypto.

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