Congress should enact laws to regulate crypto spot market, Biden administration says

Following a tumultuous year in cryptocurrency markets, the Biden administration recommended that Congress enact legislation to regulate the spot market for cryptocurrency assets that are not securities, according to the Financial Stability Oversight Council's 2022 annual report issued Friday. It also recommended steps to "address regulatory arbitrage and an assessment of whether vertically integrated market structures can or should be accommodated under existing laws and regulations," according to the report. While there was substantial volatility in digital assets during the year, leading to bankruptcies of Celsius Network, FTX, and BlockFi, "the crypto-assets ecosystem did not have a notable effects on the traditional financial system," the FSOC said. That could change quickly if more interconnections between crypto and traditional finance develop. Some potential sources of interconnections include stablecoin issuers' reserve assets held by traditional financial institutions and crypto-asset trading platforms expanding leveraged trading and asset customers to a range of retail investors and traditional finance institutions, it said. As part of the Treasury Department, the FSOC falls under the executive branch of the U.S. government. Most crypto tokens have been in the red for much of Friday. Bitcoin ( BTC-USD ) has dropped 3.3% over the past 24 hours to $16.8K, ethereum ( ETH-USD ) -6.0% to just under $1.20K, Binance coin ( BNB-USD ) -6.6% , and Ripple ( XRP-USD ) -4.5% . Crypto-related stocks are also sliding. Marathon Digital ( MARA ) -9.9% , Riot Blockchain ( RIOT ) -6.8% , Bitfarms ( BITF ) -6.7% , Coinbase Global ( COIN ) -4.8% , MicroStrategy ( MSTR ) -6.8% , and Bakkt Holdings ( BKKT ) -7.5% . Dear readers: We recognize that politics often intersects with the financial news of the day, so we invite you to click here to join the separate political discussion.