Biden administration report: Congress needs to pass stablecoin legislation as soon as possible and limit issuers as insured banks

读者

2021-11-02 09:03 (UTC+8)

This article is about 1671 words, reading the full article takes about 3 minutes

The President’s Financial Markets Task Force argues that, if regulated, stablecoins could “support faster, more efficient, and more inclusive payment options.”

AI Summary

Expand

The President’s Financial Markets Task Force argues that, if regulated, stablecoins could “support faster, more efficient, and more inclusive payment options.”

This article comes fromCNBCsecondary title

Odaily Translator | Nian Yin Si Tang

Summary:

- Stablecoins, digital assets pegged to traditional currencies, could change the way Americans pay for everything from cellphones to haircuts, the Biden administration said.

- The President’s Working Group on Financial Markets found that, if regulated, stablecoins could “support faster, more efficient, and more inclusive payment options.”

- However, an economic adviser to U.S. President Joe Biden said Congress should pass legislation limiting stablecoin issuance to insured banks only.

A long-awaited report from the Biden administration shows that stablecoins pegged to traditional currencies are a popular digital asset that could change the way Americans pay for things every day — from cellphones to gas to haircuts And coffee and everything.

The Presidential Working Group on Financial Markets (PWG) said that when regulated, stablecoins can “support faster, more efficient, and more inclusive payment options.” The task force includes several of President Biden's top economic advisers.

“Furthermore,” the report reads, “a shift to widespread use of stablecoins as a means of payment could occur rapidly due to network effects, or the relationship between stablecoins and existing user bases or platforms.”

However, Biden's economic adviser said Congress must quickly introduce regulations and formal market structures to protect and inform investors, issuers and exchanges.

Specifically, the Biden team recommends that Congress pass legislation to limit the issuance of stablecoins to insured banks, a move that would give regulators greater jurisdiction over the industry.

Senior administration officials told CNBC their report focused on risks, but the top U.S. regulator believes stablecoins offer a compelling digital payment option but require more oversight from lawmakers.

Unlike volatile cryptocurrencies, the $130 billion stablecoin market is gaining traction thanks in large part to stablecoins’ stable valuations and ties to national currencies. This stability makes them a growing source of liquidity for the global cryptocurrency market. They are used by traders and investors to buy and sell other assets, or as a safe place to store wealth.

In this sense, stablecoins are more like a medium of exchange and store of value for traditional fiat currencies. It also sets them apart from crypto assets such as bitcoin, which investors typically view as a source of capital appreciation and potential market returns.

Stablecoins, like other digital assets, need to be monitored to ensure they are not funding criminal activity, SEC Chairman Gary Gensler said in a release Monday. Gensler is also a member of the President's Financial Markets Task Force.

“The use of stablecoins presents a range of public policy challenges in protecting investors,” Gensler said, “Furthermore, stablecoins may provide a range of public policy challenges for those seeking to sidestep a range of public policy objectives associated with our traditional banking and financial system. Facilitation, these objectives include anti-money laundering, tax compliance, sanctions, and other safeguards against illicit activity.”

The U.S. government said it spoke to several key players in the crypto industry when drafting the analysis, including payments platforms Visa, Mastercard and Square, and exchanges Coinbase, Gemini and Kraken.

The working group is most concerned with what they call "prudential" risks. Such risks include runs on stablecoins, failure of issuers to honor redemption requests, or market concentration.

The report's authors recommend that "Congress act expeditiously to enact legislation to ensure that payment stablecoins and payment stablecoin arrangements are subject to the federal prudential framework on a consistent and comprehensive basis."

To address these widespread concerns, the report recommends that lawmakers limit the issuance of stablecoins to insured banks.

Classifying stablecoin issuers as banks would give government agencies — including the FDIC and the Federal Reserve — greater jurisdiction over their operations, risk management, and better visibility into the overall health of the industry.

Regulators will be able to enforce capital and liquidity standards designed to keep financial institutions safe and ensure that issuers can meet promises to redeem assets.

Yet the proposal has faced opposition from some in particular, including Republican Senator Cynthia Lummis of Wyoming. Lummis thinks the requirement is too much and will hurt smaller start-ups.

“I agree with many of the recommendations, including the need for Congressional legislation and prudent risk management, but not the suggestion that only protected depository institutions should be able to issue stablecoins,” she said in prepared remarks. “We should all agree , startups should have the same opportunities as Wall Street institutions. However, as the report makes clear, Congress will have the final say.”

Administration officials also noted that discussions with Congress are still in their early stages.