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The US Treasury Department is reportedly allowing the US Securities & Exchange Commission (SEC) to take the lead in regulating stablecoins, including Tether and USD Coin. A highly anticipated report expected to be published later this week will state that the SEC will have significant authority over stablecoins.

A few people familiar with the matter told Bloomberg that the Treasury and other agencies will soon announce that the SEC will obtain “significant authority” over stablecoins.

The anticipated report will also urge Congress to pass legislation to clarify that these coins should be regulated in the same way as bank deposits. Companies would need to seek licenses under these rules. This approach has garnered support from stablecoin firm Circle, which has plans to become a commercial bank in the future.

According to Bloomberg, the Commodity Futures Trading Commission (CFTC) will also have a role in overseeing the regulation of stablecoins.

The Treasury’s report was announced during a meeting of The President’s Working Group for Financial Markets (PWG) in July, with the PWG stating its intention to explore creating a new type of banking charter for stablecoin issuers among other regulatory measures at the time.

The PWG comprises representatives from top U.S. regulatory agencies, including Treasury Secretary Janet Yellen, SEC Chair Gary Gensler, Federal Reserve Chair Jerome Powell, and acting CFTC head Rostin Behnam.

Gary Gensler, SEC chairman, lobbied Janet Yellen, the US Secretary of the Treasury, and a few members of the President’s Working Group on Financial Markets to allow the securities regulator to set and enforce policies on stablecoins.

The SEC chairman and Federal Reserve Chairman Jerome Powell stated that centralized stablecoins share common qualities with money market funds and therefore should be regulated similarly under the securities watchdog’s purview.

Gensler previously compared stablecoins to “poker chips,” adding that stablecoins are an easy on-ramp to risky investments.

Tether, the largest stablecoin in the world with a market capitalization of over $70 billion, has faced massive controversy over the assets that back the digital coin. The firm stated that each USDT was backed by one US dollar at the bank, but it was forced to revise its statement after an investigation by the New York Attorney General.

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