Gary Gensler, chair of the Securities and Exchange Commission, stated on Friday that the Commodity Futures Trading Commission should be given additional authority to regulate cryptocurrency stablecoins in order to lower risks to the financial system.
Stablecoins are primarily used to allow trading in other digital assets and are often fixed to the U.S. dollar.
Stablecoins, which have a market worth of around $150 billion, resemble money market funds in many ways and require the same kind of regulation, according to Gensler, who made the remarks at a Georgetown University Psaros Center for Financial Markets and Policy conference in Washington.
Although organizations that issue stablecoins backed by dollars are subject to anti-fraud and anti-manipulation regulatory oversight by the CFTC, Mr. Gensler claimed that the agency lacks “real plenary jurisdiction to set rules around the exchanges.”
“I believe the CFTC might be given more power. The underlying non-security tokens are not now subject to their direct regulatory control, he noted.
According to Mr. Gensler, the great majority of cryptocurrencies, including so-called algorithmic stablecoins, are securities and are regulated by the SEC, while a small number are not.
Top financial regulators from the United States’ Financial Stability Oversight Council earlier this month recommended that Congress pass legislation to address the risks that digital assets pose to the financial system, including measures to strengthen the regulation of stablecoins and crypto spot markets.
Although a number of measures have been submitted to address the regulation of stablecoins and digital commodities, it is still uncertain whether Congress will enact laws pertaining to cryptocurrencies.
