A meeting with the President’s Working Group on Financial Markets was held in which U.S. Treasury Secretary Janet Yellen discussed the use of stablecoins.
The US Treasury Secretary met with members of the President’s Working Group on Financial Markets and representatives from numerous US financial institutions to address the risks posed by the expanding stablecoin sector.
While the regulators reviewed potential applications of stablecoins in payments, they also examined the threats they represent to the country’s financial system and national security, according to a press release issued following the meeting.
Yellen was joined by a number of other officials, including 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).
Yellen highlighted during the meeting on the “urgent need to act quickly to ensure an adequate US regulatory framework is in place” to prevent risks.
Additionally, delegates were briefed on the President’s Working Group on Financial Markets’ impending report on stablecoins.
The paper will underline the potential benefits and hazards associated with dollar-pegged stablecoins and make recommendations on how to address holes in the current regulatory framework that correspond to those concerns.
The US Treasury and Federal Reserve have also expressed concern about stablecoins in recent weeks, with Secretary Yellen and Chairman Powell both pushing for adequate regulation. Powell said last week before the Senate Banking Committee that the United States should “appropriately regulate” stablecoins.
Stablecoins are privately-issued digital assets that are tied 1:1 to another asset. They entail the issuer maintaining the reserves necessary to back them, and the majority of them are tied to the US dollar.
Numerous cryptocurrency and financial organisations have released stablecoins worth a total of $110 billion in the global market. USD Tether (USDT), USD Coin (USDC), True USD (TUSD), Gemini USD (GUSD), and Binance USD are just a few of the most widely utilised stablecoins (BUSD).
In the last year, stablecoins have increased in value by a factor of ten. Global regulators have expressed concern about the rapid emergence of stablecoins, arguing that regulation is necessary to guarantee they do not become a source of financial instability.
