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Coindesk Breaks Down the Priorities the FSOC Lays Out for Regulatory Policy
Last week the Financial Stability Oversight Council published its 124-page document addressing its recommendations for crypto and it will largely prove to be a roadmap for regulators going forward.
The FSOC is comprised of the heavy hitter in financial regulation and policy, including Treasury Secretary Janet Yellen, Fed Chair Jerome Powell, SEC Chair Gary Gensler, Commodity Futures Trading Commission Chair Rostin Behnam, the U.S. Comptroller of the Currency, Consumer Financial Protection Bureau Director Rohit Chopra, FDIC Acting Chair Martin Gruenberg, National Credit Union Administration Chair Todd Harper, among others.
Coindesk took a deep dive and came up with the most salient things that the industry needs to know about where their thinking is for future regulatory priorities.
The actual report went largely into detail on what currently exists in crypto, detailing existing rules and regulations, some of the recent events and precedents that we’ve seen and a summary of how regulators see crypto posing eventual risks to the U.S. and possibly the broader financial system.
“Some characteristics of crypto-asset activities have acutely amplified instability within the crypto-asset ecosystem. Many crypto-asset activities lack basic risk controls to protect against run risk or to help ensure that leverage is not excessive. Crypto-asset prices appear to be primarily driven by speculation rather than grounded in current fundamental economic use cases, and prices have repeatedly recorded significant and broad declines,” the report said.
The report also took aim at how a lot of the companies that offer services in the crypto ecosystem advertise themselves as regulated. They’re not lying, but the report is concerned that usually this means they’re overseen as money transmitters.
FSOC is concerned that money transmitter frameworks don’t have a huge focus on anti-money laundering controls, customer protection and absolutely does not look at financial stability concerns.
Other recommendations include closer coordination between different regulators, whether that’s state-to-state or with different types of regulatory entities, and having federal regulators continually build out and reassess their crypto knowledge as they oversee and license different entities.
There's also a call for “a coordinated government-wide approach to data and to the analysis, monitoring, supervision, and regulation of crypto-asset activities. The Council recommends that member agencies consider the use of available data collection powers in order to facilitate assessments of the financial risks related to crypto-assets, as part of data sharing and coordination efforts among the members.”