In a document published this Monday (3), the US Financial Stability Council (FSOC) states that: “activities with cryptocurrencies pose risks to the country”. Therefore, the council is asking the government to address the issue urgently.
With regard to risks, the text emphasizes that there is no basic risk control, citing excessive leverage as an example. Then it points out that the price of cryptocurrencies is more related to speculation than to their use.
Other points raised included the presence of companies with exposure to such an asset class, as well as concerns about vulnerabilities of the technology behind cryptocurrencies.
FSOC is in a hurry to plug gaps in legislation
As a highlight, the agency identified three gray areas of the cryptocurrency industry. One refers to tokens and cryptocurrencies that are not securities, i.e. in addition to the fact that the SEC has no control over the assets, enforcement work is not under the command of another.
Next, the possibility of “regulatory arbitration” is emphasized. That is, some companies may be operating under other laws to get around the current set of laws.
Another point that is finally mentioned is the offer of certain products by brokers.
“The implications for financial stability and investor protection may arise from retail investor exposure to certain practices commonly offered by vertically integrated trading platforms, such as automated settlement.”
As for the existing regulations, the FSOC notes that many companies in the sector describe themselves as “regulated”. However, keep in mind that this is not always the case. As a highlight, it points out that exchanges may list cryptocurrencies and tokens that are considered securities.
Other points discussed included offering such assets without permission, as well as questioning the promotion of stablecoins.
Much has already been done, but there is still work to be done.
Finally, the document states that: “Much of the ‘crypto-assets’ ecosystem is covered by the existing regulatory framework”. However, it is necessary to close all loopholes exploited by market participants.
The most important would be the inspection of assets that are considered commodities, i.e. cryptocurrencies such as Bitcoin. The bureau mentions the risk of market manipulation and conflicts of interest as a highlight. Apparently, such markets will be under the command of the CFTC.
Another, also important, has to do with the big role that cryptocurrency exchanges have won. After all, digital currencies no longer only provide trading services, but also other revenues that are already common in the traditional market.
Source: Live Coins
John Cameron is a journalist at The Nation View specializing in world news and current events, particularly in international politics and diplomacy. With expertise in international relations, he covers a range of topics including conflicts, politics and economic trends.
