U.S. Financial Regulators Urge Congress to Act on Crypto Spot Market Regulation

FSOC Calls for Legislative Action on Crypto Spot Market Regulation

The U.S. Financial Stability Oversight Council (FSOC) has urged lawmakers to pass legislation determining which regulatory authority will oversee the crypto spot market. This recommendation comes as part of a broader effort to address risks associated with digital assets.

During an October 3 meeting, Jonathan Rose, a senior economist at the Federal Reserve Bank of Chicago, outlined the FSOC's findings. The council released a report in response to President Joe Biden's executive order on crypto, identifying key risks to financial stability and regulatory gaps.

Regulatory Gaps in the Crypto Spot Market

The report highlighted significant regulatory gaps, particularly in the spot market for cryptoassets that are not classified as securities. These assets currently fall under "limited direct federal regulatory oversight," creating opportunities for market manipulation and conflicts of interest.

The FSOC emphasized the need for legislative action to clarify regulatory responsibilities and ensure adequate oversight of the crypto spot market. This move aims to protect investors and maintain financial stability while fostering innovation in the digital asset space.

By addressing these gaps, U.S. regulators hope to create a more robust framework for the crypto industry, balancing oversight with the need for technological advancement.