2 years ago
Two US lawmakers, Maxine Waters and Patrick McHenry are collaborating connected a measure that would enforce strict bank-like regulations for stablecoins, The Wall Street Journal reported July 20.
Stablecoin issuers would reportedly beryllium forced to person their reserves backed successful blimpish assets similar currency and US Treasury bonds that would not beryllium susceptible to marketplace panics nether the projected law.
Lawmakers interest astir stablecoin vulnerability
The US lawmakers are disquieted that stablecoins are susceptible to slope runs if doubts astir their issuer’s quality to redeem their tokens 1:1 for the US dollar emerge.
Tether, the USDT issuer, experienced a mini-bank tally successful May erstwhile it had to grant astir $10 cardinal successful withdrawals successful 2 weeks.
According to the WSJ, this could pb to a concern wherever a stablecoin issuer is forced to liquidate its reserves, thereby placing much downward unit connected the broader fiscal industry.
Treasury Secretary Janet Yellen antecedently raised the interest that stablecoins indispensable beryllium decently regulated to mitigate against immoderate “current and aboriginal risks.”
Stablecoin issuers to beryllium treated similar banks
The caller measure wants stablecoin issuers treated much similar banks alternatively than wealth marketplace funds.
Banks successful the US look tougher regulatory oversight and are mandated to comply with national agencies to support their customers’ funds.
According to the report, stablecoin issuers should beryllium required to comply with national supervision alongside superior and liquidity rules.
Meanwhile, the measure besides seeks to restrict non-financial companies from being capable to contented stablecoins — a determination designed to abstracted fiscal firms and commercialized businesses oregon technological firms.
Federal Reserves to service arsenic regulator
The study said the measure positions the Federal Reserve arsenic the regulator of “payment stablecoins issuers.”
The Fed was favored implicit the Securities and Exchange Commission (SEC) due to the fact that it has a amended grounds of handling fiscal stableness risks.
Wall Street Journal reported that the Fed has doubly intervened successful wealth funds crises successful the past 12 years.
The study added that the SEC raised concerns that the measure mightiness not code stablecoin trading and mightiness not springiness capable regulatory oversight to show platforms wherever these transactions occur.
SEC main Gary Gensler has spoken astir stablecoins successful respective interviews and has compared them to poker chips.
The station US lawmakers suggest bank-like regularisation for stablecoin issuers appeared archetypal connected CryptoSlate.
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