Crypto vulnerabilities addressed
The Financial Stability Oversight Council (FSOC) has released its annual report, once again emphasizing the need for Congress to implement crypto legislation. The report specifically calls for greater regulation of spot markets and stablecoins in order to enhance the integrity and stability of the US financial system.
According to FSOC, the crypto market faces various vulnerabilities, including price volatility, high leverage usage, interconnectedness within the industry, operational risks, and potential runs on crypto platforms and stablecoins. The council also highlights concerns regarding token ownership concentration, cybersecurity risks, and the proliferation of non-compliant platforms.
A year of regulatory enforcement
In light of a turbulent year for the crypto industry, with several key players facing regulatory consequences, FSOC’s report comes as no surprise. FTX founder Sam Bankman-Fried was found guilty of fraud, Binance founder Changpeng “CZ” Chao was charged with violating anti-money laundering regulations, and the IRS has made a tax claim against FTX seeking over $24 billion in restitution.
However, amidst these challenges, Binance introduced a cryptocurrency triparty banking agreement to mitigate counterparty risk.
A “resilient” financial system
In her remarks on FSOC’s 2023 report, US Secretary of the Treasury Janet L. Yellen acknowledges that while the US financial system remains resilient, vulnerabilities still exist. She emphasizes the importance of ongoing efforts by FSOC to enhance resilience and monitor vulnerabilities within the financial system.
Hot Take: Political gridlock hinders crypto legislation
The release of FSOC’s report coincides with increased discussions in Congress regarding cryptocurrency legislation. However, political gridlock and infighting may impede progress in passing significant regulations for cryptocurrencies. This could result in a prolonged legislative process, making it challenging to address the growing concerns and vulnerabilities in the crypto market.
By
By
By
By