Yellen to convene U.S. regulators to discuss potential risks of stablecoins

19 Jul, 2021 12:56
source: Singularity Financial

Singularity Financial Hong Kong July 19, 2021 – Treasury Secretary Janet Yellen is convening a working group to examine stablecoin regulation and risks.  Announced Friday, Treasury Secretary Janet Yellen is scheduled Monday to hold a meeting of the President’s Working Group on Financial Markets to discuss stablecoins.

In addition to the Treasury secretary, the working group is comprised of the heads of the Federal Reserve, Securities and Exchange Commission and Commodity Futures Trading Commission, and this session will also include two bank regulators: the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp.

Stablecoins, digital currencies pegged to national currencies like the U.S. dollar, are increasingly seen as a potential risk not just to crypto markets, but to the capital markets as well.

“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 said in the statement. “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.”

Jeremy Allaire, chief executive of the USD Coin issuer, Circle Internet Financial Inc., said the meeting of the president’s working group is a good thing for stablecoins and that he supports developing clear standards. “I think it’s good news,” he said.

“There are many reasons to think that stablecoins—at least, many of the stablecoins—are not actually particularly stable,” Boston Federal Reserve President Eric Rosengren said in a June speech.

In February, the New York State Attorney General Letitia James banned the use in New York of a stablecoin called Tether USDT and an associated crypto exchange, Bitfinex, for making false statements about the currency’s backing.

The planned meeting follows comments by Fed Chair Jerome Powell last week warning that stablecoins lack needed regulatory oversight.

“They are like money funds, they’re like bank deposits and they’re growing incredibly fast but without appropriate regulation,” Powell said in answering questions before the Senate Banking Committee on last Thursday. “And if we’re going to have something that looks just like a money market fund or a bank deposit or a narrow bank and it’s growing really fast, we really ought to have appropriate regulation. And today, we don’t.”