The administration of U.S. President Joe Biden is considering bringing stablecoin issuers within the legal framework. They could be subjected to the same requirements used in regulating the banking sector, The Wall Street Journal reports, citing sources familiar with the matter.
Sources said the Biden administration also intends to ask Congress to consider legislation creating a special charter for stablecoin issuers. The measures are aimed at addressing regulators’ concerns about the risks associated with the dissemination of these digital assets.
According to sources, the Financial Stability Oversight Council (FSOC) should deem stablecoin-related activity systemically important. They noted that FSOC is recommended to deem stablecoin-related activity systemically important.
This could lead to the the Fed issuing tougher risk-management standards for such organisations, while they are not yet regulated at the federal level.
The Financial Stability Oversight Council (FSOC) includes the U.S. Secretary of the Treasury, the Fed, SEC, CFTS and a number of other regulatory agencies.
According to The Wall Street Journal, engagement with the Council is not a priority, as developing special requirements is a laborious process. The recommendations will be included in the report of the President’s Working Group on Financial Markets. The group includes Treasury Secretary Janet Yellen, Fed Chair Jerome Powell, and SEC Chairman Gary Gensler.
The administration will urge Congress to include stablecoin issuers in banking regulation. This scenario is preferred by the administration, WSJ sources noted.
In July, Secretary Yellen urged to accelerate the development of a regulatory framework for stablecoins.
According to the press, in September the U.S. Treasury discussed with representatives of the banking community and credit unions the risks and benefits of stablecoins. In the same month there was information about the Treasury’s intention to require stablecoin issuers to ensure their free conversion into fiat.
Gary Gensler called stablecoins “poker chips in a Wild West casino”, and in the U.S. Senate they stated the need for full cash backing of these digital assets.
Powell said the Fed does not intend to ban cryptocurrencies, however plans to bring stablecoins under the legal framework.
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