The White House appears to be in a race with legislators to crack down on stablecoins.
Reports this week show the President’s Working Group for Financial Markets looking into how to apply restrictions to these cryptocurrencies, which are typically pegged to the value of fiat money.
“Without the safeguards, I think the industry and regulators alike think we might miss out on some potential benefits of financial innovation,” Treasury Under Secretary for Domestic Finance Nellie Liang said, according to coverage at Coindesk. “So I think there’s a common appreciation of needing a framework that isn’t too onerous, provides protections and can keep the innovation moving forward. … We believe legislation is important. This is a new technology, a new innovation. It shouldn’t be surprising that the current regulatory framework isn’t set up to address some of the new kinds of risks that this could pose.”
These notices are important for a stablecoin economy worth an estimated $138 billion.
Not long ago, SEC Chairman Gary Gensler made headlines suggesting that various tokens including some stablecoins could be seen as securities, and should be regulated as such.
Now, the Biden administration seems to be piling on, with an appetite for tightening up regulation on various types of cryptocurrency.
Coindesk’s Nikhilish De notes that the government appears to want to limit stablecoin interaction with telecom providers and other third parties.
“Should Congress not act, the Financial Stability Oversight Council (FSOC) could designate some stablecoin activities as being ‘systemically important payment, clearing and settlement activities’ (PCS activities), which would give federal agencies the authority to draft their own regulations around stablecoins,” De writes, describing how the federal government could step into the fray. “The council, created in the wake of the 2008 global financial crisis, is made up of financial regulators from different agencies and chaired by the Treasury secretary.”
Look out for changes in this area of crypto as you manage your own investments.
