March 3, 2022
By Priyanka Shetty
One of Washington’s most influential and liberal think tanks, Center for American Progress (CAP), thinks that it’s possible for US regulators to use existing laws to bring digital assets like cryptocurrencies under supervision.
Here’s what we know:
- US regulators are struggling to regulate “stablecoins” whose creators say they have pegged their values to the dollar and other fiat currencies. The U.S. Treasury Department kicked the issue to Congress in a report last year.
- Center for American Progress (CAP) in it’s report says, it would be helpful for Congress to address gaps within the current regulatory framework — such as creating rules for crypto commodities.
- However, they warned that a brand new regulatory structure for crypto could weaken supervision and create regulatory arbitrage. Todd Phillips, director of financial regulation and corporate governance at CAP said, “For crypto securities, we already have an existing structure in place, and that structure needs to be enforced. We don’t need to recreate the wheel”.
- CAP has put down a number of measures agencies can take within their current mandates. For example, the SEC could regulate crypto wallet providers as clearing agencies, or the CFTC could require the disclosure of the assets that back stablecoins. Further, the banking regulators could allow banks to issue their own stablecoins without congressional authorization, so long as they would be backed by dollar reserves.
- CAP is of the belief that crypto assets are simply new, digital versions of the traditional financial products and physical assets that have been regulated for generations. Further points out that, “Congress must act cautiously and deliberately when considering crypto legislation and should not enact regulatory carve outs that provide special treatment to new versions of old products”.
About the author
Based in Bengaluru, Priyanka Shetty is a freelance writer for Blockchain Asset Review.