Janet Yellen – the current US Secretary of the Treasury – urged the American financial regulators to implement new rules on stablecoins. She believes that this type of cryptocurrency is rapidly expanding, and the authorities should “act quickly.”
Stablecoins Need an ‘Appropriate US Regulatory Framework’
Bloomberg reported that during a recent meeting of the President’s Working Group on Financial Markets, the US Treasury Secretary – Janet Yellen – warned that stablecoins are not properly supervised in the States. As such, the lawmakers must “act quickly” and put them under a regulatory framework. The Treasury Department commented:
“The secretary underscored the need to act quickly to ensure there is an appropriate US regulatory framework in place.”
At the meeting, the US officials also discussed the rapid growth of stablecoins, their possible benefits as a payment method, and potential risks that they might pose to the financial system and end-users. The top American watchdogs will reportedly issue a plan for fixing any regulatory gaps around those digital assets in the following months.
While cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), Dogecoin (DOGE), and many more could be attractive investment options, they could also be volatile and thus highly risky. Stablecoins, on the other side, are designed to offer more security as they are pegged to solid assets such as national currencies or precious metals.
Last week, the Federal Reserve Chairman – Jerome Powell – also raised the topic about digital currencies and their proper regulation. He said that the US will issue a publisher’s report in September and will include in it virtual assets, stablecoins, and CBDCs:
“We’re going to address digital payments broadly. It means stablecoins, it means crypto-assets, it means a CBDC. That whole group of issues and payment mechanisms, which we think is really in a critical point in terms of regulations.”
China And Japan Also Urged for Strict Rules on Stablecoins
Recently, the People’s Bank of China expressed its concerns that digital currencies, particularly stablecoins, could negatively impact the global financial system. The deputy governor of the institution – Fan Yifei – even described them as “speculation tools:”
“Some commercial organizations’ so-called stablecoins, especially global stablecoins, may bring risks and challenges to the international monetary system, and payments and settlement system, etc.”
Additionally, the Japanese government considered putting stablecoins under strict regulation as some authorities believe they are a threat to the country’s financial stability.
Featured Image Courtesy of NPR