LAWMAKERS PUSH FOR ENHANCED CRYPTO REGULATION AND CFTC ROLE 

Concerns are mounting among U.S. policymakers about the lack of regulatory clarity surrounding crypto assets.

On February 6, leaders of the House Financial Services and Agriculture Committees penned a letter to Treasury Secretary Janet Yellen, expressing worries about the absence of regulations in the spot market for digital assets that are not classified as securities.

The letter, signed by Patrick McHenry, Glenn Thompson, French Hill, and Dusty Johnson, chairs of various House committees, urged Yellen, in her capacity as Chair of the Financial Stability Oversight Council (FSOC), to address the calls for filling existing regulatory gaps in the spot market for digital assets.

Furthermore, on February 6, the House Financial Services Committee conducted a hearing with Yellen on the FSOC’s annual report.

CFTC Oversight on Non-Securities

This letter echoes calls from both the FSOC and Commodity Futures Trading Commission (CFTC) Chairman Rostin Behnam to address regulatory gaps in the crypto market.

“Despite identifying these gaps, regulators have not created an environment that ensures consumer protection and promotes digital asset innovation in the United States.”

They argue that proposed legislation already exists to grant the appropriate agency jurisdiction over non-security assets.

The bipartisan Financial Innovation and Technology Act for the 21st Century (FIT21) would give the CFTC authority over digital asset spot markets.

The bill also aims to implement robust customer protections for entities registered with the SEC and CFTC.

“The necessity for federal legislation concerning cash market digital assets has never been more crucial, and I will continue to advocate for action,” said Behnam last month.

The letter concluded by stating that more than a year has passed since the crypto collapses and contagions of 2022, yet the U.S. still lacks robust regulations.

“Despite the collapse of several digital asset firms and associated customer losses over a year ago, digital asset firms continue to operate despite ongoing gaps in federal oversight.”

Republicans are holding Secretary Yellen’s FSOC accountable for its failure to fulfill its statutory mission of identifying and responding to emerging risks in line with progressive priorities, according to a press release on Patrick McHenry’s opening remarks at the meeting.

Procrastination Persists

The Biden Administration’s delay in regulating digital assets has led to a drain of talent and innovation.

Meanwhile, agencies like the SEC have taken unilateral action, filing lawsuits against numerous crypto companies for failing to comply with laws that may not be applicable to them.

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