By Pete Schroeder
WASHINGTON (Reuters) – The U.S. Treasury Division met with quite a lot of business contributors this week to quiz them concerning the dangers and advantages posed by stablecoins — a quickly rising kind of cryptocurrencies, the worth of which is pegged to conventional currencies, in keeping with three individuals with direct data of the conferences.
Washington policymakers are alarmed on the quickly increasing cryptocurrency market which exceeded a file $2 trillion in April. As of Friday, the market cap of stablecoins stood at roughly $125 billion, in keeping with business information website CoinMarketCap. It’s unclear which monetary rules apply to those comparatively new merchandise.
U.S. monetary regulators are working to grasp the dangers and alternatives posed by cryptocurrencies to the normal U.S. monetary system and plan to concern quite a lot of studies on the topic in coming months, they’ve mentioned.
In July, Treasury Secretary Janet Yellen mentioned the federal government should transfer shortly to ascertain a regulatory framework for stablecoins.
In an indication these efforts are gathering tempo, Treasury officers this week met with monetary business executives to debate potential stablecoin regulation, the three sources mentioned.
Two of the individuals mentioned that in conferences this week, one in every of which came about on Friday, officers requested whether or not stablecoins would require direct oversight in the event that they change into extraordinarily common. In addition they mentioned how regulators ought to attempt to mitigate the dangers of too many individuals attempting to money of their stablecoins on the similar time, and whether or not main stablecoins needs to be backed by conventional belongings.
Officers additionally requested about how stablecoins needs to be structured, how they could possibly be used, whether or not the present regulatory framework is enough, and different security and soundness points, one of many individuals mentioned.
Treasury officers additionally met earlier within the week with a gaggle of banks and credit score unions to debate comparable points, one other of the individuals mentioned. Treasury officers seemed to be gathering info and didn’t share their pondering on how stablecoins needs to be regulated, this particular person added.
The knowledge gathered at this week’s conferences is probably going to assist form a broad Treasury report on stablecoins anticipated within the coming months.
In an announcement, Treasury spokesman John Rizzo mentioned the division is analyzing “potential advantages and dangers of stablecoins for customers, markets, or the monetary system.”
“As this work continues, the Treasury Division is assembly with a broad vary of stakeholders, together with client advocates, members of Congress and market contributors,” he added.
Washington policymakers fear the rise in privately-operated currencies might undermine their management of the monetary and financial programs, enhance systemic dangers, promote monetary crime, and harm buyers.
The U.S. Securities and Alternate Fee, the Commodity Futures Buying and selling Fee, the Federal Reserve and the Workplace of the Comptroller of the Forex are additionally engaged on cryptocurrency tasks, they’ve mentioned.
(Writing by Michelle Value; enhancing by Lauren LaCapra and David Gregorio)