The Treasury Department supports the US Federal Reserve’s initiative to introduce stablecoin regulation.
Earlier, US Treasury Secretary Janet Yellen appealed to the President’s Financial Markets Working Group (PWG) to speed up the legalization of secured digital currencies.
According to the official, the United States must have an appropriate regulatory framework. Since the digital currency market accumulates large capitals.
So, in the coming months, regulators are planning to issue recommendations to address regulatory gaps in relation to stablecoins. At a meeting of the presidential working group on financial markets, regulators discussed the potential use of stablecoins. As well as the risks to users and the financial system. Such aspects, along with an analysis of the current regulatory framework for gaps in legislation, the PWG will reflect in the recommendations.
The working group includes representatives from the Securities and Exchange Commission (SEC), the Federal Reserve, the Office of Foreign Exchange Control and the Federal Deposit Insurance Corporation, as well as the Commodity Futures Trading Commission (CFTC) and the Treasury. The first meeting dedicated to crypto regulation took place last Monday, July 19.
The meeting of the Presidential Working Group on Financial Markets, which brings together leading financial market observers, highlights how quickly policymakers are taking action to keep their rules up-to-date with the rapid technological changes in digital currencies.
Interest of the American authorities in stablecoins
Federal Reserve Chairman Jerome Powell also spoke out last week on the regulation of stablecoins in the United States. Stablecoins have a future, Powell said, but they need a well-designed regulatory framework to do so. In order to facilitate the work with stablecoins, it is necessary to extend the rules for working with bank deposits and mutual funds to stablecoins.
The Fed is currently preparing a report to be presented to the public in September. It will outline the benefits, risks, and other information to take into account when dealing with digital currencies. Cryptocurrencies, stablecoins, and CBDCs.
On July 19, Nobel Laureate in Economics and Fellow of the American Philosophical Society Paul Krugman predicted the stablecoin crisis. According to Krugman, stable digital coins are the modern version of free banking. In which private banking organizations issue their own notes, backed by real coins.
A study by Yale University economist Gary Gorton and Fed lawyer Jeffrey Zhang was released the day before. Its authors predicted the return of the United States to the era of “wild banking” of the 19th century in the absence of proper regulation of stablecoins.
In June, Boston Fed President Eric Rosengren said stablecoins were a threat to the financial system. However, the vice-chairman of the department, Randal Quarles, urged not to be afraid of stablecoins.
Many observers note that the interest of the American authorities in stablecoins is growing. Due to the large volume of investments in such assets. Therefore, the development of a regulatory framework for this market segment will be part of Washington’s plan to increase the transparency of the cryptosphere.