The Financial Stability Oversight Council has released a report that identifies financial stability risks and gaps in the regulation of crypto-asset activities in the U.S. and offers recommendations to help address such gaps.
According to the report, crypto-asset activities lack fundamental risk controls and that prices of crypto-assets seem to be driven by speculation.
The document identified three regulatory gaps and one is that crypto-asset entities do not have a comprehensive regulatory framework and can be involved in regulatory arbitrage.
Recommendations cited in the report include the passage of a measure that would provide federal financial regulators with rulemaking authority over the spot market for crypto-assets that are not securities and study of potential vertical integration by crypto-asset firms.
“The report concludes that crypto-asset activities could pose risks to the stability of the U.S. financial system and emphasizes the importance of appropriate regulation, including enforcement of existing laws,” said Treasury Secretary Janet Yellen.
“It is vital that government stakeholders collectively work to make progress on these recommendations,” Yellen added.