The former chair of the US Commodity Futures Trading Commission (CFTC), Timothy Massad, has said that regulatory agencies need to cooperate to use the existing banking laws to oversee stablecoin regulations.
Former CFTC chair says new laws are not needed to regulate stablecoins
US regulators have turned their attention toward stablecoin regulations. The debate over stablecoin regulations has intensified following the collapse of the TerraUSD (UST) stablecoin in May this year.
Most regulators and legislators agree that new laws should be introduced to regulate stablecoins. However, a few stakeholders believe that the existing banking laws will be enough to regulate the stablecoin market.
Timothy Massad, the former CFTC chair, believes that new regulations to oversee stablecoins are unnecessary. Instead, he suggests that regulatory agencies work together to leverage the existing banking laws to regulate these digital assets.
While speaking in an interview with Bloomberg, Massad said that it was good to have regulation in the sector. However, he also expressed his doubt that the financial players can come up with comprehensive laws. Therefore, he opts that regulators have a solid starting point that they can use to regulate these assets and social trading platforms.
“While legislation would be great, we’re not sure it will happen number one, and we’re a little concerned that it won’t be comprehensive, so what we’re saying is financial regulators today have the authorities they need to create a framework to try to bring this activity within the banking parameter,” he said.
Massad also stressed that he was not against regulations. According to him, it was not common for US regulators to work together to regulate a market. Therefore, this was one of the critical factors that inhibited the formulation of stablecoin regulations.
In the interview, Massad gave some proposals that he believed could be used to regulate the cryptocurrency market. One of these proposals he made is that the US could develop a national trust bank. The bank would also have a payment agency whose role will be stablecoin regulations.
Massad has also stressed that under this proposed regulation, the bank should not operate like an actual bank. Instead, its role will be to oversee stablecoins, whose use in the US has increased significantly.
CFTC and SEC tussle over crypto regulations
One of the hindrances that have inhibited crypto regulations in the US is finding the right agency that will be tasked with regulating the market. The US Securities and Exchange Commission (SEC) holds the upper hand in crypto regulations. However, there has been debate over whether the CFTC should take the mantle, given that some crypto assets could be classified as commodities.
Senator Cynthia Lummis proposed a crypto bill seeking clarity on which agency should regulate the crypto market. If this bill is passed, the CFTC could be given the mantle to regulate most of the crypto market.
The need for stablecoin regulations follows the collapse of Terra in May, which triggered billions of dollars worth of losses. However, no regulatory law has been passed on a federal level, and only regulators based in New York have proposed laws to govern the sector. The US is also waiting for oversight regarding House stablecoin regulators to bring clarity.
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