(Reuters) — The U.S. Congress should give the Commodity Futures Trading Commission more powers to police cryptocurrency stablecoins to reduce risks to the financial system, Securities and Exchange Commission Chairman Gary Gensler said on Friday.
Stablecoins are typically pegged to the US dollar and are primarily used to facilitate trading in other digital assets.
With a market capitalization of around $150 billion, stablecoins have many similarities to money market funds and must be regulated accordingly, Gensler said at a conference hosted by Georgetown University’s Psaros Center for Financial Markets and Policy in Washington.
While the CFTC has anti-fraud and anti-manipulation authority over companies that issue dollar-backed stablecoins, it does not have “actual authority to write rules around the exchanges,”; Gensler said.
“I think the CFTC could have greater authority. They don’t currently have direct oversight over the underlying non-security symbols,” he said.
The vast majority of cryptocurrencies, including so-called algorithmic stablecoins, are securities and fall under the SEC’s authority, while a handful are not, Gensler said.
The Financial Stability Oversight Council, a US oversight panel of top financial regulators, recommended earlier this month that Congress pass legislation to address the risks digital assets pose to the financial system, including bills to strengthen oversight of crypto spot markets and stablecoins.
It remains unclear when Congress might pass crypto-related legislation, although several bills have been introduced to deal with stablecoins and regulation of digital commodities.