Regulators Call on Congress to Create New Rules for Cryptocurrencies
Tyler Gellasch, a former SEC attorney who now heads the Healthy Markets Association, questioned whether Congress would take the necessary action. “Given the incredible growth of the industry and its lobbying prowess, there is no guarantee that the new legislation will lead to more oversight and, frankly, it will likely lead to less,” he said. . “This report is undoubtedly the starting point for crypto lobbying games.”
The rise in stablecoins is tied to the broader crypto boom this year.
Stablecoins are used to support a growing number of crypto transactions and transactions in the $ 2.6 trillion crypto industry, as most cryptocurrencies, including Bitcoin, are extremely volatile and inconvenient for these purposes. purposes. These include accounts where stablecoin holders can get loans or earn high returns on deposits, similar to a bank savings account, but without the federal insurance that protects those bank accounts.
If Congress does not act, the report suggests that a regulator created after the 2008 financial crisis, known as the Financial Stability Oversight Council, could step in and designate stablecoins as a potential systemic risk, immediately granting federal regulators have new powers to demand changes in how stablecoins work. The report doesn’t recommend this as a first step, but it suggests that if Congress doesn’t act quickly, regulators will consider turning to the supervisory board.
“Stablecoins involve issues that go far beyond stability, like financial inclusion and even web infrastructure, and as such, in an ideal world, would be subject to congressional action,” he said. said Chris Brummer, Georgetown University law professor and financial technology expert. who served on the Commodity Futures Trading Commission panel on virtual currencies. “The question is whether Congress will be able to act quickly and effectively.”
Treasury officials have repeatedly stressed the scale of the risk if Congress does not act quickly.
“Some stablecoin deals are already significant, and many stablecoins are growing,” the report said, detailing the risks of a potential consumer rush to pull out a stablecoin. “A race occurring under tense market conditions can potentially amplify the shock to the economy and the financial system.”
Some industry participants saw the report as recognition of both the potential of stablecoins to transform the payment system and the legitimacy of cryptocurrencies in general.