According to individuals in the know, the upcoming report from the US Treasury Department could give significant authority to the Securities and Exchanges Commission (SEC) over stablecoins.
SEC Trying To Control Stablecoins
The unnamed source also claimed that the highly anticipated report from the Treasury Department and other US government agencies would also appeal to Congress to impose regulations on these stablecoins similar to bank accounts.
The President’s Working Group on Financial Markets has been in charge of formulating the report, which will address concerns of digital currencies threatening the economy. The report will also address the Biden administration’s POA for regulating the sector.
Gensler Gets His Way
Creating a new bank charter for companies that issue stablecoins was proposed in earlier versions of the report. However, the language was amended reportedly due to the insistence of SEC chief Gary Gensler to include the SEC’s right to regulate stablecoin activity in the investment sector. Furthermore, the report might also propose that another regulatory body, the Financial Stability Oversight Council, look into the systemic risk factor of these tokens.
Ever since he was appointed the head of the SEC, Gensler has been vocal about increasing regulations on the digital currency and blockchain industry. He believes that stablecoins fall under the regulatory jurisdiction of the SEC since they can sometimes invest in corporate bonds and other assets. Furthermore, he has referred to stablecoins as ‘poker chips,’ referencing their high-risk potential. Under his leadership, the SEC has started looking into tokens launched by Coinbase and Circle.
Reportedly, Gensler lobbied US Secretary of the Treasury Janet Yellen and other members of the report team to allow the legislation that would empower the SEC to regulate stablecoins. Federal Reserve Chairman Jerome Powell joined him in pointing out the similarities between stablecoins and SEC-regulated money market funds, demanding equal oversight in the former market.
No Stability In Stablecoins Market
Stablecoins like Tether (USDT) and USD Coin (USDC) have already been in regulatory doldrums lately. For example, Tether, which is the largest stablecoin in the world, with a market cap of $70 billion, was forced to revise its claim that each USDT was backed by a US dollar at the bank after being investigated by the New York Attorney General. However, stablecoin firm Circle has indicated its support for this proposed legislation, as it wishes to convert to a commercial bank in the future.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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