Regulators Must “Act Quickly” on Stablecoins, Yellen Says
Key Takeaways
The U.S. Treasury Secretary Janet Yellen met with the President’s Working Group on Financial Markets to discuss the risks created by the burgeoning stablecoin market.
Yellen urged regulators to “act quickly” to deal with stablecoins.
Regulators discussed the risks stablecoins pose to the country’s financial system and national security.
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The U.S. Treasury Secretary Janet Yellen held a meeting with President’s Working Group on Financial Markets to discuss stablecoins.
Janet Yellen Warns Regulators Over Stablecoins
Janet Yellen says that regulators need to move fast to respond to the growth of stablecoins.
The U.S. Treasury Secretary held a meeting with members of the President’s Working Group on Financial Markets and several heads of U.S. financial institutions to discuss the risks created by the burgeoning stablecoin market.
According to a press release following the meeting, while the regulators considered the potential use cases of stablecoins in payments, they also scrutinized the risks they pose to both the country’s financial system and its national security.
Yellen was joined by Gary Gensler (Chairman of the Securities and Exchange Commission), Michael J. Hsu (Acting Comptroller of the Currency), Rostin Behnam (Acting Chairman of the Commodity Futures Trading Commission), and Jerome Powell (Chairman of the Federal Reserve Board), among others.
During the meeting, Yellen commented on “the need to act quickly to ensure there is an appropriate U.S. regulatory framework in place” to mitigate risks.
The attendees were also briefed on an upcoming report on stablecoins by the President’s Working Group on Financial Markets.
The report will reiterate the potential benefits and risks of dollar-pegged stablecoins and give recommendations on how to close gaps in the current regulatory framework in line with those risks.
In recent weeks, the U.S. Treasury and the Fed have raised concerns about stablecoins, with both Secretary Yellen and Chairman Powell calling for appropriate regulations. Last week, Powell said that the U.S. should “appropriately regulate” stablecoins in testimony before the Senate Banking Committee.
Stablecoins are privately-issued cryptocurrencies that are pegged 1:1 to another asset. They require the issuer to maintain the reserves backing them, and most of them are pegged to the U.S. dollar.
Various cryptocurrency and financial firms have issued stablecoins that represent a global market value of $110 billion. Some of the most used stablecoins include USD Tether (USDT), USD Coin (USDC), True USD (TUSD), Gemini USD (GUSD), and Binance USD (BUSD).
Stablecoins have grown by a factor of 10 in the last year. The rapid growth has sparked fears among regulators worldwide, who argue that regulation is needed to ensure stablecoins do not become a source of financial instability.
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