Media: SEC to regulate stablecoins in the United States

The U.S. Securities and Exchange Commission (SEC) will gain authority to regulate stablecoins. The proposal appears in a report to be presented by the PWG, Bloomberg writes citing sources.

The PWG was formed by representatives of the Federal Deposit Insurance Corporation, the Fed, the SEC, CFTC, the Department of the Treasury, as well as the Office of the Comptroller of the Currency.

The authors of the report would urge Congress to enact legislation establishing a regulation regime for stablecoins similar to that applied to bank deposits.

The agency noted that adoption of the recommendations would strengthen the SEC’s enforcement and rulemaking capabilities in the crypto market.

Sources said that expanding powers was pressed by SEC chief Gary Gensler. For the industry this would be “bad news,” as most participants believe that the SEC undermines the balance between fostering innovation and protecting consumers.

“The amendments make clear that authorities will play an active role in regulating stablecoins, while longer-term measures are under development,” — journalists noted.

The document also explains that certain powers in this area will also be granted to the Commodity Futures Trading Commission. Bloomberg also suggested that PWG would approach the Financial Stability Oversight Council for an assessment of potential systemic risks.

“We do not intend to allow problems from so-called stablecoins, which may not actually be stable,” — said Deputy Treasury Secretary for Domestic Finance Nellie Liang.

In September, Gensler called stablecoins “poker chips for a crypto casino.” He warned that tokens may have “attributes of investment contracts,” and thus should be regulated by the SEC and CFTC.

The agency reminded about concerns about the rapid rise in popularity of global stablecoins such as Facebook’s Diem.

“Earlier in October, a group of US senators urged Facebook CEO Mark Zuckerberg to immediately halt the Novi pilot and commit not to bring the Diem stablecoin to market.” — journalists noted.

In September, Facebook’s payments chief David Marcus suggested that global regulators would remove obstacles to launching a stablecoin in 2021.

In September, the US Treasury planned to require stablecoin issuers to ensure their free convertibility into fiat. A month later The Wall Street Journal, citing sources, reported that issuers of stablecoins may face the same requirements as banks.

In October it became known that the issuer of USD Coin (USDC) plans to become a “commercial cryptocurrency bank with full-reserve banking.”

Previously, the Fed called the stablecoin Tether (USDT) a “challenge” to financial stability. Later, Bloomberg reported the start of an investigation into the activities of Tether Limited.

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