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Trump has vowed that the United States would be the “crypto capital of the planet,” and during his election campaign drew heavy financial support from cryptocurrency backers.
On Friday, the Financial Stability Oversight Council (FSOC) recommended that Congress pass legislation “providing federal financial regulators with explicit rulemaking authority over the spot market for crypto assets that are not securities.”
It also urged lawmakers to approve rules creating a federal framework for stablecoin issuers.
Stablecoins are cryptocurrencies typically pegged to real-world units such as the dollar and are seen as less volatile than other cryptocurrencies — though the FSOC noted they could be a risk to financial stability.
The council noted the need for “appropriate risk management standards,” saying stablecoins could be vulnerable to runs.
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The FSOC is chaired by Treasury Secretary Janet Yellen and consists of members including Federal Reserve Chair Jerome Powell and other regulators.Their recommendations come amid growing interest in digital assets, with Trump appointing an “AI and Crypto Czar” this week — to advise the incoming administration on cryptocurrency and artificial intelligence.
In a speech ahead of the annual report’s approval, Yellen noted that the FSOC has been addressing emerging risks from technological changes.
She noted that despite benefits like efficiencies, digital assets and AI bring “financial risks, cyber risks, and risks from third-party service providers.”
“We recommend building further interagency expertise to analyze and monitor potential systemic risks associated with the use of AI in the financial services sector while facilitating innovation,” she said.
Beyond crypto and AI, Yellen stressed that officials have remained focused on credit risk in the commercial real estate sector.
“This risk became more evident this year, and regulators should continue to focus on the financial industry’s ability to address it,” Yellen said.
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