WASHINGTON (Reuters) – The U.S. Congress should give the Commodity Futures Trading Commission more power to oversee cryptocurrency stablecoins to reduce risks to the financial system, Securities and Exchange Commission Chairman Gary Gensler said on Friday.

Stablecoins are usually pegged to the US dollar and are primarily used to facilitate the trading of other digital assets.

With a market capitalization of about $150 billion, stablecoins have many similarities to money market funds and need to be regulated accordingly, Gensler said at a conference hosted by Georgetown University’s Center for Financial Markets and Policy in Washington.

While the CFTC has anti-fraud and anti-manipulation regulatory authority over firms that issue dollar-backed stablecoins, it doesn’t have “actual authority to write rules for exchanges,” Gensler said.

“I think the CFTC could have more powers. They currently have no direct regulatory authority over non-security underlying tokens,” he said.

The vast majority of cryptocurrencies, including so-called algorithmic stablecoins, are securities and subject to the SEC’s authority, while a few are not, Gensler said.

In March, TerraUSD, an algorithm-based, rather than asset-pegged, stablecoin, exploded spectacularly, pushing another major stablecoin, Tether, below its dollar peg and causing waves in the global cryptocurrency market.

The Financial Stability Oversight Board, a U.S. regulatory group that includes top financial regulators, earlier this month recommended that Congress pass legislation that addresses the risks digital assets pose to the financial system, including bills to strengthen oversight of spot crypto markets and stablecoins.

It remains unclear when Congress might pass crypto-related legislation, although several bills aimed at regulating stablecoins and digital goods have been introduced.

(Reporting by John McCrank; Editing by Paul Simao)

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