The 77-page report calls for the collaborative effort of seven relevant regulatory bodies to establish crypto asset regulations.
The US Government Accountability Office (GAO) has emphasized the urgent need for cross-agency collaboration in cryptocurrency regulation.
As requested by Representatives Maxine Waters and Stephen Lynch, the extensive 77-page document targeted the current cryptocurrency regulations, putting emphasis on crypto asset trading platforms and stablecoins.
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With the duo previously heading the Financial Services Committee in the House of Representatives, the report's call for enhanced regulatory measures was anticipated.
Focusing primarily on the policies and actions of regulators, the report avoided the contentious debates surrounding the precise classification of securities.
The report underscored the spot markets for nonsecurity crypto assets as the focal point of regulatory ambiguity, expressing:
By designating a federal regulator to provide comprehensive federal oversight of spot markets for nonsecurity crypto assets, Congress could mitigate financial stability risks and better ensure that users of the platforms receive protections.
The GAO also emphasized the necessity of regulating stablecoins, particularly concerning their reserves' composition, audit and disclosure procedures, as well as redemption rights.
It highlighted the present regulatory framework's fragmentation across the Securities and Exchange Commission, the Commodity Futures Trading Commission, and state-level jurisdictions, leading to a lack of “consistent and comprehensive prudential regulation and oversight.”
The report provided insight into the challenges of regulating decentralized finance (DeFi), noting its feasibility inversely related to the degree of decentralization.
On top of that, the GAO identified the need for improved coordination between regulatory bodies. It also noted industry concerns about regulators' sluggish response to market innovation.
The report's primary recommendation involved urging the seven relevant regulatory bodies to collectively establish or adapt a formal coordination mechanism. This mechanism would be instrumental in "collectively identifying risks posed by blockchain-related products and services and formulating a timely regulatory response."
While the National Credit Union Administration agreed with the finding, other bodies neither agreed nor disagreed. Despite the non-binding nature of the GAO's recommendations, the implications of the century-old auditor's conclusions carry significant moral weight.
