Treasury Secretary Janet Yellen to Act on Stablecoin Regulation
- Janet Yellen and other financial watchdogs met to discuss a regulatory framework over stablecoins
- The group will present their recommendations on how to regulate the cryptocurrency class in recent months
Janet Yellen Meets with Top Financial Watchdogs to Regulate Stablecoins
Janet Yellen, the Secretary of the US Treasury Department, urged regulators that the US government must move quickly toward introducing a regulatory framework for stablecoins and digital currencies. This is due to the fact that their value is pegged to a sovereign currency issued by a central bank.
Ms. Yellen met with top financial regulators, including Federal Reserve Chairman Jerome Powell, and Securities and Exchange Commission (SEC) Chair Gary Gensler. The group, called the President’s Working Group on Financial Markets (PWG) held a closed meeting earlier in the week.
Other participants included the heads of the Commodity Futures Trading Commission (CFTC), Federal Deposit Insurance Corporation (FDIC), and Treasury officials. Among them Acting Comptroller of the Currency Michael Hsu.
The meeting, according to the released readout, aimed to discuss stablecoins and their rapid growth in recent months. Also, the potential uses of stablecoins as a means of payment, along with the risks involved in using the tokens were discussed.
Ms. Yellen, as indicated in the details of the meeting,” underscored the need to act quickly to ensure there is an appropriate U.S. regulatory framework in place.”
In conclusion, the discussions ended with the regulators’ commitment to issue recommendations on stablecoins in the coming months.
Efforts to Regulate Cryptos Have Been Gathering Pace
The meeting happened at a time when Bitcoin’s price has slipped over 50% from its record high in mid-April. Regulators, however, have had cryptocurrency markets high on their agenda for at least several months.
The unrestrained growth of the crypto space this year raised concerns among policymakers that the unregulated market poses risks for investors, including the growing class of stablecoins.
The main risk in dealing with stablecoins is that the companies that create them must back them 1:1 by a fiat currency.
In the case of the largest stablecoin, Tether, the company’s claim that each Tether was backed 1:1 by US dollars turned out to be false after an audit was performed.