Under the President’s Working Group on Financial Markets, the U.S. Treasury Department is working with other financial authorities to deliver a report with suggestions for a possible regulatory framework for stablecoins within the next month.
As U.S. regulatory agencies step up examination of these digital currencies, stablecoins — a fast-growing segment of the crypto market — may face laws similar to those that control money-market funds, as well as new banking rules.
Officials from the U.S. Treasury met with representatives from financial institutions last week to discuss stablecoin laws and other crypto problems.
Treasury Secretary Janet Yellen, Federal Reserve Chairman Jerome Powell, Securities and Exchange Commission (SEC) Chairman Gary Gensler, and other senior financial regulators met July 19, when Treasury staff presented their approach to this report.
No regulatory oversight
The Treasury staff working on this report are still wondering about how stablecoins are utilized, Bloomberg said.
Stablecoins are cryptocurrencies whose value is linked to fiat currencies such as the US dollar, precious metals, or short-term assets to reduce the inherent volatility of cryptocurrencies.
Despite this, there is no regulatory supervision or FDIC support. Tether (USDT-USD), TrueUSD, and Paxos are three of the most popular stablecoins. According to Coinmarketcap.com, the value of stablecoins in circulation has surpassed $120 billion.
Stablecoins’ susceptibility to runs, similar to money-market funds, is one of the major concerns being investigated.
To investigate or not
Officials are assessing whether stablecoins can be a dependable means of payment for individuals, as well as whether regulators need to decrease the risk associated with payment systems.
The Financial Stability Oversight Council has yet to make a judgment on whether or not to investigate stablecoins. U.S. Senator Elizabeth Warren asked the Financial Stability Oversight Council (FSOC) to utilize its powers to address cryptocurrency concerns this summer.
Yellen, for her part, has called on authorities to develop a regulatory framework for stablecoins as soon as possible.
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