- Republican lawmakers sent a letter to Treasury Secretary Yellen highlighting regulatory gaps in crypto markets and asking how FSOC determines crypto definitions and regulation across agencies.
- The letter raises questions about differences between SEC and CFTC jurisdiction over crypto, and calls for legislation expanding CFTC authority to spot markets.
- In testimony, Yellen agreed legislation is needed to address regulatory gaps and protect consumers, but specific proposals remain contested as the regulatory landscape evolves.
Republican lawmakers recently sent a letter to U.S. Treasury Secretary Janet Yellen seeking answers about how the Financial Stability Oversight Council (FSOC) determines how cryptocurrencies should be defined and regulated at the federal level. The letter highlights gaps in crypto regulation and asks questions about coordination between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).
Background on FSOC and Regulatory Gaps
The FSOC is tasked with monitoring risks to the financial system. CFTC Chair Rostin Behnam and SEC Chair Gary Gensler are FSOC members. In a 2022 report, the FSOC called out gaps in spot crypto market regulation and recommended legislation to give regulators authority over spot markets. The Republican lawmakers said these gaps fail to ensure consumer protection and innovation.
Questions About Securities Laws and Crypto
The lawmakers asked about FSOC’s views on how securities laws apply to crypto issuers, citing the Ripple Labs case. They asked if FSOC believes bitcoin and ether are not securities and if the CFTC’s jurisdiction should expand to the spot crypto market.
Calls for Legislation and CFTC Authority
The lawmakers said their Financial Innovation and Technology for the 21st Century Act would close regulatory gaps identified by FSOC by expanding CFTC authority over cash markets. They argue this bill is needed for a comprehensive crypto regulatory approach.
Yellen’s Testimony on Crypto Regulation
In recent Congressional testimony, Yellen called on lawmakers to pass legislation on stablecoins and spot crypto markets. She said there are regulatory gaps where legislation would be useful to protect consumers and address risks.
Conclusion
The letter shows Republican lawmakers seeking clarity on gaps in crypto regulation and FSOC’s views. Their questions highlight differences between agencies and calls for legislation empowering the CFTC. Yellen agrees legislation is needed but specific proposals remain contested. The crypto regulatory landscape continues to evolve.
