US Treasury Secretary Yellen Outlines Plans to Regulate Stablecoins in Collaboration With the Fed, SEC, CFTC
U.S. Treasury Secretary Janet Yellen will convene a meeting with the Biden administration’s working group on financial markets to discuss stablecoin regulation. “In light of the rapid growth in digital assets, it is important for the agencies to collaborate on the regulation of this sector and the development of any recommendations for new authorities,” said Yellen.
US Government Discussing Stablecoin Regulation
U.S. Treasury Secretary Janet Yellen announced Friday her plans to discuss the regulation of stablecoins. She will convene a meeting today July 19 of the President’s Working Group on Financial Markets (PWG) to discuss the matter. The meeting will also be attended by the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC).
Yellen explained, “Bringing together regulators will enable us to assess the potential benefits of stablecoins while mitigating risks they could pose to users, markets, or the financial system.” The treasury secretary detailed:
In light of the rapid growth in digital assets, it is important for the agencies to collaborate on the regulation of this sector and the development of any recommendations for new authorities.
According to the announcement, “The PWG was established to enhance the integrity, efficiency, orderliness, and competitiveness of U.S. financial markets.”
Yellen is a member of the PWG, along with the chairman of the Board of Governors of the Federal Reserve System, the chairman of the Securities and Exchange Commission (SEC), and the acting chairman of the Commodity Futures Trading Commission (CFTC).
The discussion will build on the PWG’s “Statement on Key Regulatory and Supervisory Issues Relevant to Certain Stablecoins,” published in December 2020.
Among other things, the document explains that “Depending on its design and other factors, a stablecoin may constitute a security, commodity, or derivative subject to the U.S. federal securities, commodity, and/or derivatives laws.” It further stresses, “Stablecoin participants and arrangements must meet all applicable anti-money laundering and countering the financing of terrorism (AML/CFT) and sanctions obligations before bringing products to market.”
The Treasury’s announcement adds:
The PWG will examine the current regulation of stablecoins, identify risks, and develop recommendations for addressing those risks. The PWG expects to issue written recommendations in the coming months.