WASHINGTON (Reuters) – The U.S. Treasury Division met with plenty of trade individuals this week to quiz them in regards to the dangers and advantages posed by stablecoins — a quickly rising sort of cryptocurrencies, the worth of which is pegged to conventional currencies, in keeping with three individuals with direct data of the conferences.
Washington policymakers are alarmed on the quickly increasing cryptocurrency market which exceeded a document $2 trillion in April. As of Friday, the market cap of stablecoins stood at roughly $125 billion, in keeping with trade information website CoinMarketCap. It’s unclear which monetary laws apply to those comparatively new merchandise.
U.S. monetary regulators are working to grasp the dangers and alternatives posed by cryptocurrencies to the standard U.S. monetary system and plan to challenge plenty of reviews on the topic in coming months, they’ve stated.
In July, Treasury Secretary Janet Yellen stated the federal government should transfer rapidly to ascertain a regulatory framework for stablecoins.
In an indication these efforts are gathering tempo, Treasury officers this week met with monetary trade executives to debate potential stablecoin regulation, the three sources stated.
Two of the individuals stated that in conferences this week, certainly one of which occurred on Friday, officers requested whether or not stablecoins would require direct oversight in the event that they turn into extraordinarily in style. Additionally they mentioned how regulators ought to attempt to mitigate the dangers of too many individuals attempting to money of their stablecoins on the similar time, and whether or not main stablecoins ought to be backed by conventional property.
Officers additionally requested about how stablecoins ought to be structured, how they may very well be used, whether or not the present regulatory framework is ample, and different security and soundness points, one of many individuals stated.
Treasury officers additionally met earlier within the week with a gaggle of banks and credit score unions to debate related points, one other of the individuals stated. Treasury officers seemed to be gathering info and didn’t share their considering on how stablecoins ought to be regulated, this individual added.
The data gathered at this week’s conferences is probably going to assist form a broad Treasury report on stablecoins anticipated within the coming months.
In an announcement, Treasury spokesman John Rizzo stated the division is analyzing “potential advantages and dangers of stablecoins for customers, markets, or the monetary system.”
“As this work continues, the Treasury Division is assembly with a broad vary of stakeholders, together with shopper advocates, members of Congress and market individuals,” he added.
Washington policymakers fear the rise in privately-operated currencies may undermine their management of the monetary and financial techniques, enhance systemic dangers, promote monetary crime, and harm traders.
The U.S. Securities and Change Fee, the Commodity Futures Buying and selling Fee, the Federal Reserve and the Workplace of the Comptroller of the Forex are additionally engaged on cryptocurrency initiatives, they’ve stated.
Writing by Michelle Value; modifying by Lauren LaCapra and David Gregorio