US Treasury has released a report on the risks associated with stablecoins. The agency saw stable coins as a threat to investors and the integrity of the market. Also, requested strict legislative restrictions.
Thus, the President’s Working Group on Financial Markets (PWG) compiled the report. Its participants called on Congress to equate issuers of stablecoins with depository institutions with mandatory deposit insurance. Which will put them on a par with banks.
Supervision, according to PWG, should be carried out both at the level of such an institution and at the level of the holding company to which it belongs. The report talks about the need for restrictions on the affiliation of issuers with other commercial organizations.
The requirement for various entities
The U.S. Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) should take part in the regulation of some stablecoins, according to PWG. Any regulatory gaps should be closed by the Ministry of Finance, the Fed, the SEC and the CFTC, the authors of the document summarized.
Tether, Circle, Paxos, Coinbase, Coin Center, Diem Association, Gemini and others participated in consultations with PWG.
CEO of Circle, Jeremy Allaire, positively assessed the adoption of the industry at the conceptual level. But questioned some passages from the document. They talk about the requirement for various entities involved in transactions with stablecoins to comply with risk management standards. This is not possible in the case of validators or miners in a decentralized network.
A regulatory framework
Recall that in August, Circle announced that it intends to obtain a banking license, although the company is under investigation by the SEC.
Earlier in January 2021, former Fed Chair Janet Yellen, known for her critical attitude to Bitcoin (BTC), headed the US Treasury. Later in July, she called for the speedy creation of a regulatory framework for stablecoins. Subsequently, in September, the first fragments of the final document appeared.
Previously in October, the Office of Foreign Assets Control (OFAC), as part of the Ministry of Finance, published instructions for representatives of the cryptocurrency industry regarding compliance with US sanctions.