The Government Accountability Office has recommended that Congress introduce a measure that would provide federal oversight of the spot market for nonsecurity crypto assets and stablecoins to protect consumers and investors from unfair trading practices.
GAO made the recommendation after it found gaps in regulatory authority over stablecoins and trading platforms for crypto assets that are not securities, according to a report publicly released Monday.
Per GAO, issuers often inform investors and consumers that reserve assets are backing stablecoins. However, there is a lack of standards for reserve levels or public disclosure of such reserves.
“This increases the risk that a stablecoin may not be able to hold its value and honor user redemption requests. To the extent these stablecoins become more integrated into the financial system, their failures could pose risks to financial stability,” the report reads.
The congressional watchdog also called on financial regulators to develop a coordination mechanism to detect and address risk related to blockchain.
