Biden management would consider a new legal framework for stablecoin issuers that would put them in the same category as banks. which casts doubt on the future of cryptocurrency regulation in the country.
Citing people familiar with the matter, the Wall Street Journal reported Friday that the government is trying to convince Congress to create a new “special letter” for stablecoin issuers and other companies belonging to the same category. While it is not entirely clear what the legislation will look like, it is expected to be specifically tailored to these types of business models.
Policy makers have been sounding the alarm about stablecoins in recent months because they believe these dollar-pegged assets are not adequately regulated.. Earlier this week, Federal Reserve Chairman Jerome Powell told the Financial Services Committee that stablecoins like Tether (USDT) and USDC Coin (USDC) should be regulated within the same parameters as money market funds, such as bank deposits. However, he insisted that there wasn’t a total ban on Bitcoin (BTC) or other digital assets in the deliberations.
As Cointelegraph reported in July, a joint investigation by the Fed and Yale University outlined two regulatory frameworks for stablecoins in a 49-page document titled “Taming Wildcat Stablecoins”. In this document, The authors argued that when it came to regulating stablecoins, politics had only two options: equating them with public money or taxing them until they no longer exist via the central bank’s digital currency.
Stablecoins, digital currencies that are wholly or partially pegged to some form of fiat money like the U.S. dollar, have grown into a $ 128 billion market, according to the latest market capitalization figures. Tether makes up more than half of the total market, although competitors like USDC and Binance USD (BUSD) have made significant strides this year.. As these markets have grown, concerns about the liquidity and state of reserves of stablecoin issuers have made headlines.
After reaching an agreement with the New York Attorney General, Tether Holdings Ltd. agreed to publish regular reports testing its foreign exchange reserves. In May of this year, the company published its full breakdown of reserves for the first time.