"Digital Chamber of Commerce" Promotes Stablecoin Regulation: Promote Innovation, Abandon Misleading, Reasonable Regulation
Produced | Baize Research Institute
Produced | Baize Research Institute
According to a Bloomberg report citing anonymous sources, the U.S. Securities and Exchange Commission (SEC) is about to take a leading role in proposing legislation and overseeing the stablecoin industry, while its sister agency, the Commodity Futures Trading Commission (CFTC), will play a supervisory role. The U.S. Treasury Department and other agencies are expected to release a report this week that will also urge Congress to pass legislation establishing that stablecoins should be regulated similarly to bank deposits, the sources said. The report was prepared by the President's Financial Markets Task Force, which includes key representatives of the country's key regulators, including Treasury Secretary Janet L. Yellen, Federal Reserve Chair Jerome Powell, SEC Chair Gary Gensler and CFTC Chairman Rosteen Benham.
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"Stablecoins should not be used as securities"
Regulators have been considering applying new rules to regulate stablecoins similar to managed money market funds, as well as new banking rules. While the entire encryption industry is waiting for how the U.S. government will regulate stablecoins, the American Digital Chamber of Commerce has sent a 17-page letter to the U.S. Treasury, the Federal Reserve, and the SEC in an attempt to lobby various agencies that stablecoins should not be used as Securities or money market funds are regulated because they use blockchain technology to settle transactions instantly.
The Chamber of Digital Commerce is "the world's leading trade association representing the digital assets and blockchain industry," with a mission to "promote the acceptance and use of digital assets and blockchain-based technologies," and one of the largest lobbying groups in the crypto industry. Members of the organization include: Microsoft, JP Morgan, MasterCard, Fidelity Investments, Messari, Okey Cloud Chain and other global business and technology giants.
According to the Chamber of Digital Commerce’s letter, stablecoins should be regulated as a payment system by using the Money Transmission Act applicable in each state to standardize the current oversight system.
Perianne Boring, Founder and President of the Chamber of Digital Commerce, believes: “Stablecoins are an important part of the crypto ecosystem and are critical to any new policies or regulations that allow the technology to develop in a sustainable manner.”
“It’s really important that we get this right. If we get policy recommendations that don’t allow stablecoins to function as payment system tools, it will be pushed overseas,” she added.
According to Perianne: “If a stablecoin is classified as a security, it will limit its use as a retail payment”.
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“Stablecoins have advantages”
In the letter, the Digital Chamber of Commerce explained to regulators some of the advantages of stablecoins, as well as suggestions for regulation.
Innovative use of stablecoins poised to transform today's payment systems
“Stablecoins offer a lower-cost, faster method of payment that solves some of the most pressing problems inherent in current payment systems. While the benefits of faster, cheaper and more reliable payments will lead to many Innovation in the economic sector, but these benefits may have the greatest impact on those at the lowest rungs of the economic ladder. Stablecoin payment systems are innovating around how we send and receive payments, similar to how the Internet disrupted the way information is shared.”
Blockchain technology is changing the global financial system to create a more technologically advanced and inclusive financial future, and stablecoins are the tool to drive this change. Regulators have a unique opportunity to establish the United States as a leader in stablecoin innovation by adopting a regulatory regime that is principles-based, flexible, and tailored to minimize the risk that stablecoins pose to the financial system.
To this end, we propose to preserve existing federal and state-level regulatory regimes that allow stablecoin payment systems to be regulated in the same way as other retail-focused digital payment businesses.
US-based stablecoins are subject to extensive regulation at the state and federal level
The U.S.-based stablecoin payment system pegged to the U.S. dollar is widely regulated. As discussed below, the applicable regulatory framework may involve funds transmission laws and state trust company charters at the federal level, as well as FinCEN, CFPB, and CFTC regulations at the federal level. Before attempting to develop a new regulatory regime, policymakers should first identify which gaps exist through a transparent and open process. We believe that there are no major gaps in the existing regulatory regime for US-based USD-pegged stablecoin payment systems, but there are opportunities to streamline and improve the regulatory approach.
Dollar-pegged stablecoin payment systems that focus on the U.S. market but do not have a U.S. headquarters are also generally subject to U.S. regulations. In our view, an important way for the U.S. to respond to the growth of stablecoin payment systems based primarily outside the U.S. is to ensure that the U.S. regulatory environment allows for a U.S.-based, structurally transparent, dollar-pegged stablecoin payment system to operate safely and efficiently. prosper. Furthermore, international cooperation is essential to reduce financial risk and prevent regulatory arbitrage. The United States should continue to work through the Financial Stability Board and other international standard-setting bodies, and where possible, align and coordinate with other major market jurisdictions to ensure regulatory harmonization that reduces risk while allowing innovation to occur.
Principles for any future regulatory action
The Chamber of Digital Commerce believes that the following principles should guide regulators’ decisions on stablecoin policy:
a) technology neutral
b) Regulate in proportion to risk
c) Ensure U.S. global leadership in blockchain
d) Treat stablecoins as a type of digital payment instrument rather than an investment product
e) Ensuring compliance with anti-money laundering and countering the financing of terrorism requirements
f) Develop flexible, principles-based rules
Instead of creating an entirely new federal regulatory regime for stablecoins, regulators should consider strengthening the current regime, which involves time-tested state and federal frameworks. At the same time, a federal-level option should be available for companies that want national legal certainty derived from a federal-level special purpose charter from the national banking regulator.
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Regulators should 'put away from misleading'
SEC Chairman Gary Gensler, who has repeatedly compared stablecoins to "casino poker chips," said at a market summit this week that the crypto industry is like the "Wild West" and called on regulators to empower the industry. Institutions have more regulatory powers over them.
In this regard, the Chamber of Digital Commerce believes: "Our view that stablecoins pose systemic risks is seriously misguided."
The chamber of commerce recommends that the U.S. government provide an option for obtaining a national banking license, but it should not be required. Some crypto experts are also opposed to the regulation of stablecoins as money market funds, arguing that their assets are not like money market funds, which are used as passive investments. Most stablecoins are not designed to add value, but are used for digital payments.
Given the rapid growth of the stablecoin market, regulators are increasingly aware of systemic risks. The total market capitalization of stablecoins is now more than $130 billion, up from $37 billion in early 2021, with some of the more popular stablecoins being Tether, BinanceCoin and Paxos.
The Chamber believes that most stablecoin payment systems are similar in size to corporate rewards programs, such as airline miles or Starbucks gift cards. “Our view that stablecoins pose systemic risk is grossly misguided.”
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"Little to no risk"
However, the government is concerned that stablecoins will not function stably. Issuers hold large amounts of commercial paper or other short-term securities such as U.S. Treasuries or certificates of deposit, and if cryptocurrencies plummet, investors may choose to withdraw funds suddenly, resulting in losses for investors, or worse, the financial system may collapse. There is a run.
“I can’t use any evidence that [stablecoins] are even systemic,” Perianne said.
The Chamber of Digital Commerce is more concerned with stablecoin issuers like Circle, but not Tether. The Chamber of Digital Commerce pointed out that the reserves of U.S. stablecoin issuers such as Circle are held almost entirely in cash, rather than the large amount of commercial paper held by Tether. Unlike banks, U.S.-based stablecoin issuers are unleveraged and pose little systemic risk.
risk warning:
risk warning:
According to the "Notice on Further Preventing and Dealing with the Risk of Hype in Virtual Currency Transactions" issued by the central bank and other departments, the content of this article is only for information sharing, and does not promote or endorse any operation and investment behavior. Readers are requested to strictly abide by the laws and regulations of the region and do not participate in Any illegal financial conduct.
