Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Stablecoins In US Treasury's Agenda In Latest Regulatory Risk Assessment

Stablecoins In US Treasury's Agenda In Latest Regulatory Risk Assessment

Regulatory pressure in the U.S. is putting stablecoins at the top of policymakers' agendas.

According to Bloomberg report, officials are crafting a policy framework which is planned to be released in the coming weeks. Citing the primary concern, as always, to ensure that investors can reliably move money in and out of tokens.

The anonymous insiders familiar with the matter, are worried that a “fire-sale run on crypto assets could threaten financial stability and that certain stablecoins could scale up dangerously fast.”

The Financial Stability Oversight Council is also preparing a formal review into whether stablecoins pose an economic threat.

In the report, officials are looking into how stablecoin transactions are processed and settled and whether market conditions have an impact.

Tomicah Tillemann, global head of policy at a crypto fund run by venture capital giant Andreessen Horowitz, said:

“It is significant and very consequential that we are witnessing early steps to create a regulatory framework around digital assets. That’s a big deal.”

The report is aimed at President’s Working Group on Financial Markets, including important agency heads such as Treasury Secretary Janet Yellen, Federal Reserve Chair Jerome Powell, and Securities and Exchange Commissioner Chair Gary Gensler.

Yellen called for urgency in regulating stablecoins after stating that they are not adequately supervised earlier this year. Gary Gensler was following similar lines, in early August, stating that regulators must act to protect investors from fraud.

Acting Comptroller of the Currency, Michael Hsu, said regulators are looking into Tether’s commercial papers to see whether each USDT token was really backed by the equivalent of one U.S. dollar.

Tether has repeatedly issued assurances that its reserves are fully backed but has not yet produced a full independent audit.

Tether remains the market leader with a current supply of 69.4 billion, according to the Tether Transparency report. This is close to the all-time high for USDT, which tapped 70 billion earlier this week.

Of that total, 36 billion or 51.8% is based on the Tron network, with 33.8 billion or 48.7% running on Ethereum. USDT supply has grown by 232% since the beginning of the year.

Rival stablecoin, USDC, from Circle currently has 29.3 billion in circulation after gaining 651% in terms of supply growth so far in 2021.

According to the Times, here are the most likely options that regulators could use to corral stablecoins:

1. Designate them as a risk to the system. Under the Dodd Frank Act, regulators have the power to deem payments activity as “systemically risky” and thus under regulatory control even if the activity only poses a potential risk down the road.

2. Call them “securities.” The article notes U.S. Securities and Exchange Commission Gary Gensler recently said that stablecoins “may well be securities” and thus potentially subject to SEC regulation.

3. Treat them as money market mutual funds, which some experts say they resemble and which are regulated.

4. Regulate them like they’re banks, potentially bringing stablecoins under the regulatory oversight of the Office of the Comptroller of Currency. This option could lead to deposit insurance for stablecoin investors and thus diffuse a major criticism of stablecoins by some, namely that investors are unprotected should the assets underpinning the stablecoins go bad or if there’s a run on the stablecoin.

5. Issue a competing Central Bank Digital Currency (CBDC), something the Federal Reserve is studying. However, given privacy concerns related to CBDCs a U.S. CBDC is unlikely to substantially attract users away from stablecoins, the article observes.

Regardless of what path U.S. regulators take, they can’t go it alone, the article observes. Without international cooperation on stablecoin regulation, the stablecoins could just move elsewhere. Such international regulation might come in 2023, the Times noted, when the global Financial Stability Board is targeting final adoption of stablecoin regulations it’s working on.

Source: Stablecoins In US Treasury's Agenda In Latest Regulatory Risk Assessment – Fintechs.fi

AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Altman Says GPT-5 Already Outpaces Him, Warns AI Could Automate 40% of Work
Russian Research Vessel 'Yantar' Tracked Mapping Europe’s Subsea Cables, Raising Security Alarms
Global Cruise Industry Posts Dramatic Comeback with 34.6 Million Passengers in 2024
U.S. Demands Brussels Scrutinize Digital Rules to Prevent Bias Against American Tech
Private Equity’s Fundraising Surge Triggers Concern of European Market Shake-Out
Tokyo’s Jimbōchō Named World’s Coolest Neighbourhood for 2025
European Officials Fear Trump May Shift Blame for Ukraine War onto EU
The Personality Rights Challenge in India’s AI Era
Italy Considers Freezing Retirement Age at 67 to Avert Scheduled Hike
Italian City to Impose Tax on Visiting Dogs Starting in 2026
Study Finds No Safe Level of Alcohol for Dementia Risk
Trump Says Ukraine Can Fully Restore Borders with NATO Backing
Europe Signals Stronger Support for Taiwan at Major Taipei Defence Show
Germany Weighs Excluding France from Key European Fighter Jet Programme
Cyberattack Disrupts Check-in and Boarding Systems at Major European Airports
Björn Borg Breaks Silence: Memoir Reveals Addiction, Shame and Cancer Battle
When Extremism Hijacks Idealism: How the Baader-Meinhof Gang Emerged and Fell
JWST Data Brings TRAPPIST-1e Closer to Earth-Like Habitability
Trump Orders $100,000 Fee on H-1B Visas and Launches ‘Gold Card’ Immigration Pathway
France’s Looming Budget Crisis and Political Fracture Raise Fears of Becoming Europe’s “Sick Man”
Three Russian MiG-31 Jets Breach Estonian Airspace in ‘Unprecedentedly Brazen’ NATO Incident
European manufacturers against ban on polluting cars: "The industry may collapse"
Turkish car manufacturer Togg Enters German Market with 5-Star Electric Sedan and SUV to Challenge European EV Brands
Christian Brueckner Released from German Prison after Serving Unrelated Sentence
World’s Longest Direct Flight China Eastern to Launch 29-Hour Shanghai–Buenos Aires Direct Flight via Auckland in December
New OpenAI Study Finds Majority of ChatGPT Use Is Personal, Not Professional
The conservative right spreads westward: a huge achievement for 'Alternative for Germany' in local elections
Pope Leo Warns of Societal Crisis Over Mega-CEO Pay, Citing Tesla’s Proposed Trillion-Dollar Package
Poland Green-Lights NATO Deployment in Response to Major Russian Drone Incursion
U.S. and China Agree on Framework to Shift TikTok to American Ownership
Le Pen Tightens the Pressure on Macron as France Edges Toward Political Breakdown
Czech Republic signs €1.34 billion contract for Leopard 2A8 main battle tanks with delivery from 2028
Penske Media Sues Google Over “AI Overviews,” Claiming It Uses Journalism Without Consent and Destroys Traffic
Indian Student Engineers Propose “Project REBIRTH” to Protect Aircraft from Crashes Using AI, Airbags and Smart Materials
One in Three Europeans Now Uses TikTok, According to the Chinese Tech Giant
Could AI Nursing Robots Help Healthcare Staffing Shortages?
NATO Deploys ‘Eastern Sentry’ After Russian Drones Violate Polish Airspace
The New Life of Novak Djokovic
German police raid AfD lawmaker’s offices in inquiry over Chinese payments
Volkswagen launches aggressive strategy to fend off Chinese challenge in Europe’s EV market
France Erupts in Mass ‘Block Everything’ Protests on New PM’s First Day
Poland Shoots Down Russian Drones in Airspace Violation During Ukraine Attack
Apple Introduces Ultra-Thin iPhone Air, Enhanced 17 Series and New Health-Focused Wearables
Macron Appoints Sébastien Lecornu as Prime Minister Amid Budget Crisis and Political Turmoil
Vatican hosts first Catholic LGBTQ pilgrimage
Apple Unveils iPhone 17 Series, iPhone Air, Apple Watch 11 and More at 'Awe Dropping' Event
France joins Eurozone’s ‘periphery’ as turmoil deepens, say investors
France Faces New Political Crisis, again, as Prime Minister Bayrou Pushed Out
Nayib Bukele Points Out Belgian Hypocrisy as Brussels Considers Sending Army into the Streets
France, at an Impasse, Heads Toward Another Government Collapse
×