The US Treasury Department finally released its much-awaited stablecoin risk report on November 1st. The President’s Working Group (PWG) released a report that make note of the risks associated with the use of stablecoins in the financial market. The major stablecoin risks highlighted in the report revolve around the reserves and issuance. The official report demanded Congress formulate new laws around the stablecoin issuance.
I’m pleased to have worked with @POTUS’ Working Group on Financial Markets (PWG) on the stablecoins report.
Read the report:
— Gary Gensler (@GaryGensler) November 1, 2021
The treasury officials also conducted a press briefing on the new stablecoin risk report where they described stablecoins as “a complex multifaceted product with a complex multifaceted set of risks.” There has been a lot of discussions about the regulations around stablecoins especially after continuous friction between the existing leader Tether and law enforcement.
“To address risks to stablecoin users and guard against stablecoin runs, legislation should require stablecoin issuers to be insured depository institutions, which are subject to appropriate supervision and regulation, at the depository institution and the holding company level,” the PWG wrote. “The legislation would prohibit other entities from issuing payment stablecoins.”
The PWG also admitted that the new rules and regulations would take time before coming into practice, thus advising regulators such as the Treasury, the Federal Reserve, the Securities and Exchange Commission, and the Commodity Futures Trading Commission to use existing authorities to fill the gap.
Stablecoin Risk Report is Bullish, Says Crypto Proponents
The STABLE Act proposed at the start of the year had got many crypto proponents riled up as it talked about giving stablecoin issuance power to existing banks. However, the latest report seems to be much thorough and complete. The new report calls for stablecoin issuers to become “insured depository institutions”, on a par with banks that offer saving accounts.
The PWG seems to try to force Congress to choose between handing over regulatory power to bureaucrats or risking the unchecked FSOC stamping out crypto innovation. Another user wrote that the report was better than expected thus he is longing the USDT as a joke.
Stablecoin report was better than expected.
Longed USDC and USDT, first resistance at $1.50. https://t.co/PryHOct6dm
— Cred (@CryptoCred) November 1, 2021
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