FameEX Hot Topics | US Representatives Interrogate Treasury Secretary Janet Yellen on Regulatory Deficiencies in Cryptocurrency Supervision

Four prominent U.S. lawmakers have initiated a crucial discussion with Treasury Secretary Janet Yellen to address the regulatory deficiencies in the cryptocurrency sector. This dialogue highlights the legislative concern over the effectiveness and breadth of cryptocurrency market regulation, especially as guided by the Financial Stability Oversight Council (FSOC), chaired by Yellen. The FSOC has been vocal about the regulatory gaps in the digital asset markets, raising questions about the integration of cryptocurrencies like bitcoin, ether, and other non-security digital assets into existing legal frameworks.

The conversation was sparked by Representatives Patrick McHenry, Glenn Thompson, French Hill, and Dusty Johnson after Yellen’s testimony to the House Committee on Financial Services. Yellen advocated for legislative actions to regulate stablecoins and the crypto spot market for assets not considered securities, aligning with the concerns of McHenry, Thompson, Hill, and Johnson. These lawmakers, who hold key positions in committees and subcommittees related to financial services, agriculture, digital assets, and rural development, have underscored the FSOC's recognition of oversight shortfalls in the digital asset sector and the need for legislative solutions to these challenges.

They specifically pointed out the insufficient oversight of the spot market for non-security digital assets, the risk of regulatory arbitrage, and the question of whether current laws can accommodate vertically integrated market structures. Furthermore, the lawmakers addressed the limited regulatory powers of the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) over crypto markets, emphasizing the absence of authority to regulate platforms or intermediaries for transactions in digital assets like bitcoin and ether.

The legislators have posed critical questions to Yellen, seeking insight on the FSOC's efforts to improve coordination between the SEC and CFTC in overseeing the non-security digital assets' spot market. They inquired about the activities of the Digital Assets Working Group and Yellen's views on the application of securities laws to crypto asset issuers and transactions. Additionally, they expressed concerns regarding customer

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