US panel recommends tightening regulations on crypto assets

A US federal panel called for legislation on Friday to grant regulators more authority over specific crypto assets as President-elect Donald Trump prepares to return to the White House.

During his election campaign, Trump promised that the United States would become the “crypto capital of the planet” and received significant financial support from cryptocurrency advocates.

The Financial Stability Oversight Council (FSOC) recommended that Congress pass legislation giving federal financial regulators rulemaking authority over non-security crypto assets in the spot market. They also suggested creating a federal framework for stablecoin issuers.

Stablecoins are cryptocurrencies pegged to real-world units, like the dollar, and are considered less volatile. However, the FSOC warned that they pose a risk to financial stability and emphasized the importance of implementing appropriate risk management standards to prevent runs.

The council, chaired by Treasury Secretary Janet Yellen and including members like Federal Reserve Chair Jerome Powell, made these recommendations amidst growing interest in digital assets. Trump recently appointed an “AI and Crypto Czar” to advise his administration on cryptocurrency and artificial intelligence.

Yellen highlighted the need for interagency expertise to analyze and monitor potential systemic risks associated with the use of AI in the financial services sector, in addition to focusing on credit risk in the commercial real estate sector.

Overall, Yellen stressed the importance of regulators remaining vigilant in addressing various risks within the financial industry while fostering innovation.

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