U.S. President’s Working Group on Financial Markets outlines recommendations for stablecoin regulation

PWG says stablecoins could be regulated as securities, commodities or derivatives.

Stablecoins may be deemed securities, commodities or derivatives and fall under the relevant regulatory regimes. This view was stated by the President’s Working Group on Financial Markets (PWG).

Today, the President’s Working Group on Financial Markets (PWG) released a statement on key regulatory and supervisory issues relevant to certain stablecoins https://t.co/amkjFVphrF (1/3)

— SEC_News (@SEC_News) December 23, 2020

The advisory body published a statement on key supervisory and regulatory questions related to digital coins backed by one or more fiat currencies.

Members of the PWG noted the potential of stablecoins to improve the efficiency of the retail payments system. They also stressed the importance of establishing a clear regulatory framework for such assets.

The group believes that stablecoin issuers should comply with Know Your Customer procedures and Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) rules, and register with the Financial Crimes Enforcement Network (FinCEN).

The PWG believes that additional requirements will be needed for stablecoins to guard against risks to financial and macroeconomic stability, market integrity, and consumer protection.

The group argues that, for regulating digital assets backed by multiple currencies or not dollar-denominated, international cooperation should be broadened.

“The statement reflects both a commitment to advancing the important benefits of innovation and to achieving critical objectives related to national security and financial stability. Regulators will continue to closely monitor stablecoin arrangements and look forward to further dialogue on these issues,” said Deputy U.S. Treasury Secretary Justin Muzinich.

Earlier in Congress, a bill was introduced, requiring stablecoin issuers to obtain banking licenses and regulatory approval. Circle CEO Jeremy Allaire described the proposed requirements as “a huge step back” for digital currency innovation in the United States.

In 2020, the volume of stablecoin transactions exceeded $1 billion.

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