FameEX Hot Topics | US Legislators Question Treasury Secretary Janet Yellen Regarding Oversight Shortcomings in Cryptocurrency Regulation

In a significant move, four U.S. lawmakers have engaged Treasury Secretary Janet Yellen in a dialogue concerning the existing regulatory voids within the cryptocurrency domain. This interaction underscores the growing concern among legislators regarding the efficacy and scope of crypto market oversight, particularly led by the Financial Stability Oversight Council (FSOC), under Yellen's leadership. The FSOC has notably issued warnings about the digital asset markets' regulatory gaps, sparking a debate on how laws should encompass cryptocurrencies like bitcoin, ether, and other non-security digital assets.

The inquiry was initiated by Representatives Patrick McHenry, Glenn Thompson, French Hill, and Dusty Johnson, following Yellen's insights shared during her appearance before the House Committee on Financial Services. Yellen had urged Congress to legislate on regulating stablecoins and the crypto spot market for assets that do not qualify as securities. This call to action resonates with the positions held by McHenry, Thompson, Hill, and Johnson, who lead various committees and subcommittees focusing on financial services, agriculture, digital assets, financial technology, inclusion, commodity markets, and rural development.

The legislators have expressed their concerns regarding the FSOC's acknowledgment of oversight limitations in digital asset markets, a sentiment echoed in their proposed legislation aimed at addressing these very issues. They highlighted critical regulatory challenges such as the limited oversight on non-security digital assets' spot market, the potential for regulatory arbitrage, and the accommodation of vertically integrated market structures under current laws.

Addressing the regulatory jurisdiction of the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) over crypto markets, the lawmakers noted the absence of authority for both bodies to regulate trading platforms or intermediaries involved in spot transactions of digital assets like bitcoin and ether, which are not recognized as securities.

The Congress members posed several questions to Yellen, seeking clarity on how the FSOC facilitates coordination between the SEC and CFTC regarding the oversight of non-security digital assets' spot market. They requested information on the Digital Assets Working Group's meetings since 2017 and asked for Yellen's perspective on applying securities laws to all crypto asset issuers and transactions. Furthermore, they queried about the protection for customers in light of SEC Chair Gary Gensler's stance that most crypto tokens are securities, the classification of bitcoin and ether, and the potential expansion of the CFTC's jurisdiction to include the spot market for non-security digital assets.

This engagement from lawmakers with Treasury Secretary Janet Yellen highlights a pivotal moment in the ongoing discussion around cryptocurrency regulation, underscoring the urgent need for legislative and regulatory clarity in the rapidly evolving digital asset landscape.

Disclaimer: The information provided in this section is for informational purposes only, doesn't represent any investment advice or FameEX's official view.