Bank of America: Stablecoin Regulation as a Catalyst for Mass Adoption

A US Treasury Department report on the risks of stablecoins is an ‘indicator of urgency’ for regulating ‘stablecoins’, given their potential to become a viable payment method. Bank of America (BofA) shares this view, writes CoinDesk.

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According to the memo, institutions are awaiting regulatory clarity before granting access to digital assets.

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The analysts stressed that the regulatory framework should incentivize companies to integrate blockchain technology and stablecoins with their platforms.

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In their view, Mastercard, Signature, Visa and Western Union could boost their capitalization through stablecoin regulation. Bank of America analysts describe stablecoins as a ‘systemically important asset’ with a market value of about $141 billion and quarterly transaction volumes above $1 trillion in 2021.

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In the Treasury, by contrast, they saw systemic risk in the rapid growth of stablecoins. The authors of the document urged equating coin issuers with depository institutions with mandatory deposit insurance.

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Which, as noted by BofA, could lead banks themselves to issue their own ‘stablecoins‘.

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Earlier, US Senators diverged on opinions regarding the Treasury report. In particular, Cynthia Lummis called the requirement to treat asset issuers as banks erroneous. However the initiative found support at the main operator of USDC, Circle.

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As reported, Treasury Secretary Janet Yellen announced in July the convening of the President’s Working Group on Financial Markets to discuss the regulation of stablecoins.

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At that meeting, the Fed stated that lack of transparency of ‘stablecoins’ could threaten financial stability.

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In September, the SEC Chairman Gary Gensler pointed tothe risk of widespread use of stablecoins and described them as ‘poker chips in a crypto-casino’.

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