With pressure mounting on regulators to address the role of virtual currencies in the traditional financial market, Janet Yellen, a long-time opponent of cryptocurrencies, is scheduled to meet with a number of regulators to discuss the benefits and risks of stablecoins.
US Treasury Secretary Janet Yellen is expected to convene a meeting on July 19 alongside representatives from the President’s Working Group on Financial Markets, the Office of the Comptroller of the Currency, as well as the Federal Deposit Insurance Corporation to determine a path forward for stablecoins in the traditional financial system.
“Bringing together regulators will enable us to assess the potential benefits of stablecoins while mitigating risks they could pose to users, markets, or the financial system,” Yellen explained in a statement on Friday. “In light of the rapid growth in digital assets, it is important for the agencies to collaborate on the regulation of this sector and the development of any recommendations for new authorities.”
Stablecoins, which are digital currencies pegged to a stable asset such as the US dollar, have risen in popularity as of late. Given that they are less volatile than private cryptocurrencies such as bitcoin and ethereum, regulators have begun to view them in a relatively more favourable light.
However, regulators still remain concerned about the transparency of stablecoin trading, particularly with the reserves backing the tokens and the role they play in decentralized finance, or DeFi. With a number of cryptocurrency giants such as Coinbase and Circle going public or preparing to do so, the financial industry, along with political leaders, have called on regulators to provide more detailed regulatory framework for stablecoins.
Information for this briefing was found via the US Department of the Treasury. 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.