The Biden administration is mulling ways to implement further regulation on companies that issue stablecoins, including forcing the crypto firms to identify as banks.
Stablecoins that are issued by major cryptocurrency companies such as Circle and Tether are pegged to fiat currencies like the US dollar, and are more immune to the volatile fluctuations that have become prominent with unbacked digital coins such as bitcoin and ethereum. However, regulators still fear that stablecoins could spark financial panics, and thus require additional oversight by government organizations.
According to the Wall Street Journal which cited people familiar with the matter, the Biden administration is looking to do just that, and is exploring ways to impose tighter regulations for companies issuing stablecoins. Among the proposed ideas, the White House could ask the companies to register as banks, as well as urge Congress to establish a new legislation in order to create a special-purpose charter specifically to the companies’ business models.
The people also revealed to the WSJ that a Treasury-led body is looking to recommend to the Financial Stability Oversight Council that it consider stablecoins as systemically important. The latest guidance from the Biden administration is expected to be included in an upcoming October report from the President’s Working Group on Financial Markets, which includes prominent individuals such as Fed Chairman Jerome Powell, Treasury Secretary Janet Yellen, and SEC Chair Gary Gensler.
The latest news is welcomed by the cryptocurrency industry, as stablecoins could become more widely accepted as a form of swift payment for both consumers and businesses.
Information for this briefing was found via the WSJ. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.