On Monday, the Financial Stability Oversight Council of the Treasury Department published a comprehensive study on digital assets. To prevent cryptocurrencies and digital asset trade from jeopardizing U.S. financial stability, the report made a number of recommendations. The council lobbied for laws requiring more rigorous regulation of cryptocurrency.
The FSOC said in a new report Monday, “The rapid growth of digital asset activities, including stablecoins and lending and borrowing on digital assets trading platforms, is an important emerging vulnerability.” “Crypto-asset prices appear to be primarily driven by speculation rather than grounded in current fundamental economics.”
Treasury Secretary Janet Yellen said. “It is vital that government stakeholders collectively work to make progress on these recommendations.”
Russia is under severe sanctions from the Treasury Department for evading economic sanctions. Treasury has already identified Russian organizations trying to use cryptocurrencies to evade sanctions. An official noted that methods used to conceal digital transactions and technology that increase anonymity can obstruct the implementation of sanctions.
FSOC provides ten suggestions to reduce the risks associated with cryptocurrencies. These include urging Congress to pass new legislation giving regulators control over the spot market for crypto assets that aren’t securities, legislation governing stablecoins, and legislation giving regulators the ability to view the entire business of a crypto firm that has multiple subsidiaries that are subject to various regulations.
The report also urges regulatory bodies to continue enforcing current laws and regulations and working together to regulate cryptocurrency businesses like stablecoin issuers or crypto-asset platforms, particularly in situations where various players may be subject to various laws despite engaging in the same activities.
An executive order mandating agencies to research cryptocurrencies and a central bank digital currency (CBDC) and develop a government-wide strategy for regulating digital assets will be formally signed by President Biden on Wednesday.
The eagerly anticipated order outlines a national policy for digital assets across priority areas, such as investor and consumer protection, financial stability, combating illicit finance, sustaining U.S. dominance in the global financial system, and financial inclusion.
