US Financial Regulators Urge Congress To Pass Cryptocurrency Spot Markets Legislation

A council made up of top US financial regulators is urging Congress to regulate the cryptocurrency spot markets.

The Financial Stability Oversight Council, made up of the heads of the US Securities and Exchange Commission (SEC), the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board, and other major regulators, issued your annual report this week.

The council says non-securities crypto assets have limited federal regulations and urges Congress to rectify that.

“As a result, those markets may not be subject to a regulatory framework designed to ensure orderly and transparent trading, prevent conflicts of interest and market manipulation, and protect investors and the broader financial system. To address this regulatory gap, the Council recommends that Congress pass legislation giving federal financial regulators explicit regulatory authority over the spot market for non-securities crypto assets. The Council recommends that this regulatory authority does not interfere with or weaken the current jurisdictional powers of market regulators. Legislation should provide for enforcement and review authority to ensure compliance with these standards.”

The council also believes that cryptocurrencies could pose risks to financial stability.

“Several crypto trading platforms have proposed offering retail clients direct access to the markets by vertically integrating services provided by intermediaries such as stockbrokers or futures commission traders. Risks to financial stability and investor protection may arise from the exposure of retail investors to some practices commonly proposed by vertically integrated trading platforms, such as rapid automatic closing of client positions. Therefore, the Board recommends that member agencies assess the impact of potential vertical integration by crypto asset companies.”

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