Earlier this week, the Secretary of the Treasury, Janet Yellen, testified in front of the House Financial Services Committee. The hearing was scheduled to review the Financial Stability Oversight Council (FSOC). This is a group of federal financial regulators, and others, gathered to address risks to financial stability. Prior to the hearing, leadership of the Financial Services and Agriculture Committees sent a letter to Yellen stating, “regulators have failed to facilitate an environment that ensures consumer protection and fosters digital asset innovation in the United States.”
While the House has attempted to pass legislation that addresses stablecoin issuance as well as a broader digital asset bill, Congress has been unable to pass a bill, thus leaving the various federal agencies to pursue their own agendas. The Securities and Exchange Commission has been treading everything crypto like a security (with the exception of Bitcoin).
Somewhat ironically, in prepared testimony Yellen suggested that Congress pass legislation regulating stablecoins and spot crypto markets. Secretary Yellen said:
“… the Council is focused on digital assets and related risks such as from runs on crypto-asset platforms and stablecoins, potential vulnerabilities from crypto-asset price volatility, and the proliferation of platforms acting outside of or out of compliance with applicable laws and regulations. Applicable rules and regulations should be enforced, and Congress should pass legislation to provide for the regulation of stablecoins and of the spot market for crypto-assets that are not securities. We look forward to continuing to engage with Congress on this.”
In the current political environment, especially with the makeup of the Senate, there is little hope for legislation tackling crypto to pass. While Yellen can suggest, Congress will probably do what they do best and squabble over some common sense rules – especially with stablecoin regulation.