The U.S. Congress should give the Commodity Futures Trading Commission more powers to police cryptocurrency stable coins to reduce risks to the financial system, Securities and Exchange Commission Chair Gary Gensler said on Friday.
Stable coins are usually pegged to the U.S. dollar and are primarily used to facilitate trading in other digital assets. With around $150 billion in market capitalization, stable coins have many similarities to money market funds, and need to be regulated accordingly, Gensler said at a conference held by Georgetown University for Financial Markets and Policy in Washington.
While the CFTC has anti-fraud and anti-manipulation regulatory authorities over firms that issue dollar-backed stable coins, an actual plenary authority to write rules around the exchanges is required.
“I think the CFTC could have greater authorities. They currently do not have direct regulatory authorities over the underlying non-security tokens”
Gary Gensler said
In March, TerraUSD (UST), an algorithm-based, rather than asset-pegged, stable coin, blew up spectacularly, pushing another major stable coin, Tether, below its dollar peg and sending ripples through the whole global cryptocurrency market.
Earlier this month recommended that Congress pass legislation addressing the risks digital assets pose to the financial system, including bills to bolster oversight of crypto spot markets and stable coins.
It remains unclear when Congress might pass crypto related legislation, although several bills have been introduced to address stable coins and digital commodities regulation.
