Think tank says US can regulate cryptocurrencies without new laws

FILE PHOTO: Illustration showing representations of cryptocurrencies bitcoin and Ethereum
FILE PHOTO: A representation of bitcoin and Ethereum cryptocurrencies placed on top of the US dollar in this illustration taken, January 24, 2022. REUTERS/Dado Ruvic/Illustration

March 1, 2022

By Hannah Lang

(Reuters) – U.S. regulators can largely use existing laws to bring digital assets such as cryptocurrencies under their watch without the need for new congressional legislation, one of Washington’s most influential liberal think tank said Tuesday.

Agencies including the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) can use the report from the Center for American Progress (CAP) to inform decisions by them on how to manage cryptocurrencies.

Regulators have yet to determine the best way to regulate cryptocurrencies, especially so-called “stablecoins” whose creators say they have pegged their value to the dollar and other currencies other fiat. The US Treasury Department brought the matter to Congress in a report last year.

Progressives, worried about systemic risks and investor protection, want regulators to take a tougher stance on the issue.

The team said it would be helpful for Congress to address gaps in the current regulatory framework – such as creating rules for crypto-commodities. But it warns that a new and different regulatory structure for cryptocurrencies could inadvertently weaken oversight and create regulatory arbitrage.

“For crypto securities, we already have an existing structure and that structure needs to be enforced. We didn’t need to reinvent the wheel,” said Todd Phillips, director of financial management and corporate governance at CAP, who co-authored the paper with Alexandra Thornton, senior director of tax policy.

The CAP outlines a number of measures that agencies can take within their current mandate. For example, the SEC may regulate crypto wallet providers as clearinghouses, or the CFTC may require disclosure of the assets that support stablecoins.

The report also suggests that banking regulators could allow banks to issue their own stablecoins without congressional authorization, as long as they will be backed by dollar reserves.

(Reporting by Hannah Lang in Washington; Editing by Michelle Price and David Gregorio) Think tank says US can regulate cryptocurrencies without new laws

Caroline Bleakley

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