Report urges Congress to take action giving more regulatory oversight to on crytpo, stablecoin products

No comprehensive regulatory authority exists over the spot market for crypto assets that are not securities, and there are gaps in the regulatory oversight of stablecoins, according to a report issued Monday by the congressional watchdog.

In its report on “Blockchain in Finance,” the congressional Government Accountability Office (GAO) said legislative actions are needed to ensure comprehensive oversight of crypto assets.

On the spot market for crypto assets that are not securities, the GAO indicated legislation is necessary. It noted that several platforms conducting the trading without federal oversight have been subject to fraud and trading manipulation. “By providing for more comprehensive oversight of these platforms, Congress could better ensure users’ protection from unfair and manipulative trading practices,” the GAO said.

On stablecoin oversight, the GAO again recommended Congress ensure better protections for consumers, investors and the financial system at large. Those may include uniform standards exist for reserve levels and risks or for public disclosure of reserves in stablecoins, the GAO said.

Without those standards, the agency said, the likelihood is increased that a stablecoin may not be able to hold its value and honor user redemption requests. “To the extent these stablecoins become more integrated into the financial system, their failures could pose risks to financial stability,” GAO said.

Blockchain in Finance: Legislative and Regulatory Actions Are Needed to Ensure Comprehensive Oversight of Crypto Assets