The FSOC finally published its own report on crypto regulations.
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Welcome to State of Crypto, a CoinDesk newsletter looking at the intersection of cryptocurrency and government. I’m your host, Nikhilesh De. You’re probably here because you signed up, but in case you're not a fan, you can unsubscribehere. The Financial Stability Oversight Council (FSOC) published its own highly anticipated report in response to U.S. President Joe Biden’s executive order on crypto earlier this week, calling on Congress to define the line between a security and a non-security, at least as far as crypto is concerned. — Nik |
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What’s Inside the FSOC’s Long-Awaited Report on Crypto Regulation |
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The Financial Stability Oversight Council (FSOC) finally published a long-anticipated report about the regulation of crypto. Essentially, FSOC said it believes federal agencies already have much of the authority they need to oversee large chunks of the crypto sector. The one area it really asked for Congress to get involved is defining just where the limits of securities regulation should be. In other words, much of this wasn’t really a surprise. |
Where the line is between a crypto security and a crypto commodity is the question in the U.S.: Where exactly does the Securities and Exchange Commission's authority end and the Commodity Futures Trading Commission's authority begin? Congress has not really tried to answer that question. Sure, there are bills that sort of seek to address that, such as the Senate Agriculture Committee’s DCCPA. But a closer look at the text shows that it doesn't actually provide that definition. This has left much of crypto in an odd sort of limbo. |
FSOC published a 124-page document on Monday. Here’s CoinDesk’s Jesse Hamilton on the highlights. The actual report went largely into detail on what currently exists in crypto, detailing existing rules and regulations, some of the recent events and precedents that we’ve seen and a summary of how regulators see crypto posing eventual risks to the U.S. and possibly the broader financial system. “Some characteristics of crypto-asset activities have acutely amplified instability within the crypto-asset ecosystem. Many crypto-asset activities lack basic risk controls to protect against run risk or to help ensure that leverage is not excessive. Crypto-asset prices appear to be primarily driven by speculation rather than grounded in current fundamental economic use cases, and prices have repeatedly recorded significant and broad declines,” the report said. The report also took aim at how a lot of the companies that offer services in the crypto ecosystem advertise themselves as regulated. They’re not lying, but the report is concerned that usually this means they’re overseen as money transmitters. Continue reading... |
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Key: (nom.) = nominee, (rum.) = rumored, (act.) = acting, (inc.) = incumbent (no replacement anticipated) |
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| Italy Hasn't Vetted the 73 Crypto Firms It Approved This Year: Italy’s approved 73 crypto firms to operate this year. What the country’s financial supervisor hasn’t done is vet these companies, or check if they actually have offices in the country. Sandali Handagama takes a look at this frankly questionable state of affairs. |
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(Unchained Podcast) I don’t normally share stuff I’m on but I had a fun conversation with Laura Shin on her “Unchained” podcast about the CFTC v. Ooki DAO suit, and the different peculiarities it presents. (Wall Street Journal) I’m not great at economics but this seems worth flagging: Cargo shipping entities are planning for reduced demand. |
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If you’ve got thoughts or questions on what I should discuss next week or any other feedback you’d like to share, feel free to email me at nik@coindesk.com or find me on Twitter @nikhileshde. You can also join the group conversation on Telegram. See ya’ll next week! |
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