The US Congress Should Give CFTC More Powers Over Stablecoins – Gensler
On Friday, the US Securities and Exchange Commission (SEC) Chief Executive, Gary Gensler, testified before the Senate Housing, Banking and Urban Affairs Committee in an oversight hearing. During his testimony, Gensler said the US Congress must give the Commodity Futures Trading Commission (CFTC) more oversight functions over the stablecoins.
According to Gensler, the move will help lower risks associated with that financial sector. Stablecoins are cryptocurrencies pegged to a fiat currency, usually the US Dollar, and they are used to facilitate trading in other crypto assets. Before his recent appearance before the Senate committee, Gensler had previously said that stablecoins share some common features with money market funds and should be subjected to similar regulations.
Gensler made these earlier comments while speaking at a Washington summit organized by Georgetown University’s Psaros Center For Financial Markets and Policy. The SEC chief said the CFTC doesn’t have the complete authority to issue regulations that pertain to exchanges.
The CFTC’s Regulatory Powers
However, it is important to note that the CFTC has anti-manipulation and anti-fraud supervisory powers over companies that offer us dollar-supported stablecoins. “I would suggest greater supervisory powers for the CFTC. Currently, they have no direct oversight functions over non-Security tokens.”
Gensler added that only a few cryptocurrencies, including stablecoins, aren’t under the purview of the SEC. He says many of the top cryptocurrencies and algorithmic stablecoins are under the SEC’s authority. Six months ago, a popular algorithmic stablecoin, the TerraUSD, crashed massively, causing ripples in the global crypto space.
The TerraUSD crash also caused another popular stablecoin (tether, USDT) to lose its dollar peg, as many were selling their USDT in large volumes, thinking a crash of the USDT was imminent. Two weeks ago, the financial stability oversight council suggested that congress approve legislation that addresses the risks cryptocurrencies are causing to global financial sectors.
The council, a regulatory body, consisting of top financial regulators, added that the legislation should include bills supporting regulatory powers over stablecoins and crypto spot markets. There is no timeframe or update from congress on when it intends to approve this legislation.
However, it is on record that several bills addressing the regulation of digital commodities and stablecoins are available. In August, the Senate agriculture committee leaders introduced the digital commodities consumer protection act. The bill authorizes the CFTC to perform oversight functions on digital commodities trading.
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