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Tuesday, February 7, 2023

FSOC Wants Deeper Investigation

The Financial Stability Oversight Council (FSOC) of the U.S. has said that the regulatory landscape governing crypto assets is fragmented and has called for a “robust framework” to be established for such assets, according to a letter sent to Congressional leaders yesterday. The letter says that crypto assets may have the potential to scale quickly and threaten markets, as well as create operational risks for intermediaries because of their technical complexity. The FSOC intends on holding its second annual conference on FinTech in late spring 2023, this time with a focus on the financial stability implications of cryptocurrency markets.

The Financial Stability Oversight Council (FSOC) of the U.S., which is made up of the heads of the Federal Reserve, Federal Deposit Insurance Corporation, and Securities and Exchange Commission, said that it will soon send a letter to Congressional leaders outlining its concerns about regulations for digital assets.

FSOC Calls For Political Support

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The FSOC was created in 2010 by the Dodd-Frank Wall Street Reform and Consumer Protection Act following the 2008 financial crisis. It helps monitor risk throughout financial markets for systemic threats that could affect economic growth or stability.

The letter says that crypto assets may have the potential to scale quickly and threaten markets, as well as create operational risks for intermediaries because of their technical complexity.

The committee also noted that crypto assets could be used by bad actors to launder money or finance terrorism, which would make them a threat to US national security. It added that this has already happened in some cases.

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The FSOC is an oversight council of the US Treasury. It has been issuing letters to Congress, urging them to take action in order to protect consumers and promote innovation, though none of those letters have specifically mentioned cryptocurrency.

In its latest letter, which was penned by Chairman Michael S. Piwowar and sent to Senate Banking Committee Chair Mike Crapo (R-Idaho) and Ranking Member Sherrod Brown (D-Ohio), the FSOC reiterates these calls for action by Congress in order to ensure both financial stability and consumer protection as crypto assets continue their rapid growth trajectory:

“The FSOC intends to hold its second annual conference on FinTech in late spring 2023, this time with a focus on financial stability implications of cryptocurrency markets,” states the letter.”

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