U.S. Treasury’s Yellen says regulators to satisfy Monday to debate stablecoins

U.S. Treasury Secretary Janet Yellen testifies earlier than the Senate Appropriations Subcommittee on Monetary Providers in regards to the FY22 Treasury price range request on Capitol Hill, in Washington, DC, U.S., June 23, 2021. Shawn Thew/Pool by way of REUTERS/File Picture

July 16 (Reuters) – U.S. Treasury Secretary Janet Yellen introduced on Friday that she is going to meet with regulators subsequent week to debate “interagency work” on stablecoins, a quickly rising class of digital currencies that isfacing rising scrutiny from policymakers.

The President’s Working Group on Monetary Markets will meet on Monday with the Workplace of the Comptroller of the Forex and the Federal Deposit Insurance coverage Company to go over the advantages and dangers of stablecoins, a type of cryptocurrencies which might be pegged to extra conventional belongings, together with fiat currencies such because the greenback.

“In gentle of the speedy progress in digital belongings, it is vital for the companies to collaborate on the regulation of this sector and the event of any suggestions for brand new authorities,” Yellen stated in an announcement, noting it was necessary for regulators to evaluate the potential advantages of stablecoins whereas additionally “mitigating dangers they may pose to customers, markets, or the monetary system.”

Stablecoins and different digital funds choices are receiving extra consideration from lawmakers, Federal Reserve officers and different policymakers as new choices emerge and achieve traction.

Fed Chair Jerome Powell informed lawmakers throughout congressional hearings this week that stablecoins are “rising extremely quick” however pointed to their lack of applicable regulation as a degree of concern.

“If we’ll have one thing that appears identical to a money-market fund or financial institution deposit … we actually must have applicable regulation and at this time we do not,” Powell stated. learn extra

U.S. Senator Elizabeth Warren despatched a letter to Securities and Change Fee (SEC) Chair Gary Gensler final week asking him to deal with the dangers the cryptocurrency market poses to customers and monetary markets.

And final month, Boston Fed president Eric Rosengren referred to as the title stablecoins a “misnomer,” including that they are often risky and should pose monetary stability dangers. learn extra

The Fed is within the technique of evaluating the digital funds universe to find out if it ought to situation a central financial institution digital foreign money, identified for brief as CBDCs.

Powell stated this week that one of many strongest arguments in favor of a CBDC is that it might reduce the necessity for a number of stablecoins or cryptocurrencies, however he made it clear it isn’t sure that the Fed will likely be shifting in that route.

“I’m legitimately undecided on whether or not the advantages outweigh the prices or vice versa,” Powell stated.

Reporting by Jonnelle Marte; Enhancing by Andrea Ricci

Our Requirements: The Thomson Reuters Belief Rules.

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