The US President’s Financial Markets Working Group stated that stablecoins grew without providing the necessary protection to users, the financial system, and the overall economy.
The US Treasury Department, the Fed, and other regulatory bodies in the country have called on the US Congress to apply the capital adequacy and regular audit rules applied to banks to stablecoin companies as well.
“The rapid growth in the stablecoin market adds to the urgency of this work,” the 26-page report released yesterday by the US President’s Financial Markets Working Group said. “Failure to take action risks the growth of stablecoins without providing the necessary protection to users, the financial system, and the overall economy.”
While the report envisions the regulation of stablecoins as banking products, it was suggested that the US Securities and Exchange Commission, the SEC, the Commodity Futures Trading Commission (CFTC), and other institutions oversee transactions.
The report called for a wall to be built between “tokens” and companies outside the financial sector, referring to the separation between banking and commerce. This could also negatively impact plans to launch a stablecoin called Diem.
Tether is the largest stablecoin with $70 billion, according to CoinMarketCap data. The total size of the stablecoin market is estimated at $130 billion.