US GAO says lack of interagency cooperation needs to be addressed in crypto regulation

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In a study requested by Rep. Maxine Waters, the country’s apical watchdog is cautiously neutral but dissatisfied with agencies’ abilities to enactment together.

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US GAO says deficiency  of interagency practice  needs to beryllium  addressed successful  crypto regulation

The United States Government Accountability Office (GAO), a Congressional watchdog agency, has released a study it completed successful June connected the regulatory model for the usage of blockchain successful finance. 

The 77-page study was requested by Reps. Maxine Waters and Stephen Lynch earlier the midterm elections, erstwhile they were the seat and ranking member, respectively, of the House of Representatives Financial Services Committee. The study unsurprisingly recovered that much regularisation is needed. The bureau has a model for evaluating regulatory betterment proposals developed successful 2009.

The study pointed to crypto plus trading platforms and stablecoins arsenic products that deficiency regulation, but it examined regulators’ policies and activities without straying into “turf war” controversies related to defining securities. Thus, it identified the spot markets for nonsecurity crypto assets arsenic the halfway of a regulatory spread and stated:

“By designating a national regulator to supply broad national oversight of spot markets for nonsecurity crypto assets, Congress could mitigate fiscal stableness risks and amended guarantee that users of the platforms person protections.”

Traditional assets successful that class bask robust regulation, the study noted. Crypto assets are taxable to constricted oversight, specified arsenic from the Treasury’s Financial Crimes Enforcement Network and done authorities wealth transmitter licensing.

Related: US Congress bureau recommends 4 cardinal argumentation options for blockchain

Stablecoins request regularisation regarding the creation of their reserves, auditing and disclosures, and redemption rights. The study said existent regularisation is simply a hodgepodge of measures by the Securities and Exchange Commission, Commodity Futures Trading Commission and states that does not magnitude to “consistent and broad prudential regularisation and oversight.”

Decentralized concern is susceptible of being regulated successful inverse narration to the level of its decentralization, the GAO said. When an ecosystem is afloat decentralized, determination is nary idiosyncratic who tin beryllium identified arsenic liable for developing, operating oregon governing it. It whitethorn besides span aggregate regulatory jurisdictions successful its operations.

Blockchain technology—like #cryptocurrency—could connection faster, cheaper fiscal transactions. But caller terms crashes & bankruptcies person raised concerns astir gaps successful national regulations that could enactment consumers astatine risk. Our caller study & video explore: https://t.co/1vyIgZVaYi pic.twitter.com/nxHrk1g5dQ

— U.S. GAO (@USGAO) July 24, 2023

Moving person to turf warfare issues, the study identified a request for greater coordination betwixt regulators and noted complaints from marketplace participants astir the dilatory effect of regulators to innovations successful the market. The study noted that the Treasury’s Financial Stability Oversight Council was tasked with starring an effort to make a unified attack to crypto plus oversight by the March 2022 Executive Order connected Ensuring Responsible Development of Digital Assets.

The study recommended that the 7 pertinent regulatory agencies “jointly found oregon accommodate an existing ceremonial coordination mechanics […] for collectively identifying risks posed by blockchain-related products and services and formulating a timely regulatory response.” Furthermore:

“This mechanics could see ceremonial readying documents that found the frequence of meetings and processes for identifying risks and responding to them wrong agreed-upon clip frames.”

The National Credit Union Administration expressed statement with that finding, portion the others did not hold oregon disagree. The GAO is the country’s highest auditor. While its recommendations are not legally binding, the century-old agency’s findings transportation sizeable motivation weight.

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