Tag: FSOC

FTX CEO Says His Brand is “Totally on Board With Regulation”

by Blockchain News

In his characteristic manner, Sam Bankman-Fried, the co-founder and Chief Executive Officer of FTX Derivatives Exchange has reiterated again that his brand will be welcoming to regulations pushed by lawmakers to guide innovations in the cryptocurrency ecosystem. 

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Speaking at the Bipartisan Policy Center, Bankman-Fried noted that there has been observable friction in how the industry and those responsible for introducing regulations interact. This impasse, according to Bankman-Fried has to end, and he noted that he is willing to provide the help needed to bring functional regulations into the industry as much as possible.

“We are totally on board with regulation. It has to happen. It’s healthy. It’s the right thing to do. And we’d love to be helpful any way we can,” Bankman-Fried said. “I think our industry has not always done a great job at saying that. Sometimes maybe that was the intention, but it’s come out more like ‘fuck you’ and that that wasn’t as constructive a way to engage.”

The role played by FTX.US and the global brand has drawn talks from policy makers, however, Bankman-Fried is driving a lot of lobbying efforts in Washington. Besides the sponsor of Political Action Committees (PACs), the crypto mogul has pitched a proposition for his company to be a standalone Clearinghouse in the US.

This move has made the Financial Stability Oversight Council (FSOC) highlight the fears in the proposition, including imminent risks to financial stability according to a report released earlier this year. 

Drawing on his previous appearances on Capitol Hill, if he has the opportunity to address the FSOC of which Treasury Secretary Janet Yellen is the Chair, Bankman-Fried said he will not take the combative approach of the industry.

“Let’s start with the low-hanging fruit,” He said. “I use stablecoins a lot as an example because I think it’s just the cleanest – it’s just like clearly a good thing which helps reduce risk, to do this without getting in the way of legitimate finance. It’s just good. Let’s do that.”

With the broader industry’s clamor for good regulation, several government agencies are already working out harmonizing modalities to make the wishes a reality.

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U.S. Financial Stability Oversight Council to Discuss Digital Asset Regulation Next Week

by Blockchain News

The Financial Stability Oversight Council (FSOC), chaired by U.S. Treasury Secretary Janet Yellen, will meet on September 23 to discuss regulatory loopholes in digital currencies and the potential risks they pose.

Previously, the annual report released by the U.S. Treasury Department’s Financial Stability Oversight Committee (FSOC) mentioned digital assets as one of the emerging innovations in the U.S. financial ecosystem and a potential threat to its stability.

The FSOC’s mission is to identify “new threats to the stability of the U.S. financial system,” noting that financial innovation in cryptocurrencies such as bitcoin and stablecoins “could provide consumer and consumer benefits by addressing unmet or emerging needs or reducing costs. Businesses bring great benefits”, but they also create risks and uncertainties.

Warren also highlighted key risks posed by cryptocurrencies, including a lack of transparency from hedge funds, threats from stablecoins, and the use of digital currencies in cyberattacks.

FSOC calls for “continued coordination between federal and state financial regulators to support responsible financial innovation and competitiveness, promote a consistent regulatory approach, and identify and address potential risks arising from such innovation.”

Last fall, the U.S. Financial Markets Working Group recommended that the FSOC should be given the power to regulate stablecoins if Congress fails to pass stablecoin regulation legislation.

Digital currencies are becoming the first asset to be looked at by U.S. regulators, especially those charged with overseeing them. With more attention, perhaps the crypto ecosystem will get more embrace from U.S. regulators, a desire of many industry giants.

U.S. President Joe Biden established a new framework on September 17 on how cryptocurrencies are traded and regulated in the U.S. – focusing on improving cryptocurrencies to perform seamless transactions and reduce what can happen with digital assets for investors and the crypto space in general crime.

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US Financial Stability Oversight Council identifies stablecoins and cryptos as threats to financial system

by Cointelegraph

In an annual report published on Friday, the United States Financial Stability Oversight Council, or FSOC, voiced its concern over the adoption of stablecoins and other digital assets. 

Regarding stablecoins, the FSOC said consumer confidence could be undermined by factors such as illiquidity, lack of appropriate safeguards, opacity regarding redemption rights, and cyber attacks. “A run on stablecoins during strained market conditions may have the potential to amplify a shock to the economy and the financial system,” the report said.

The report also alerted to developments in decentralized finance, or DeFi, where the use of high leverage could trigger a fire sale when the price of the underlying asset declines. This would result in a cycle of margin calls and further price declines. In addition, the report outlined that “users of these services face risk of loss due to market value fluctuations, operational issues, and cybersecurity threats, among other risks.” In the report’s recommendations, the FSOC calls for a unified effort between federal and state authorities to enact legislation on stablecoins and digital currencies.

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Related: SEC delays decisions on Bitwise and Grayscale’s Bitcoin ETFs

Despite concerns surrounding the much-unregulated nature of the crypto industry, the report highlighted their innovative potential:

The development of digital assets and the use of associated distributed ledger technology may present the opportunity to promote innovation and further modernization of financial infrastructure. Regulatory attention and coordination are critically important in light of the quickly evolving market for digital assets.