The United States (US) Treasury has no hesitation in classifying stablecoins as high-risk assets.
Recognizing the nature of stablecoins that are pegged to national currencies and are mostly pegged to the U.S. dollar, it is a question mark for supervisors regarding these assets as conventional financial intermediaries and cryptocurrencies whenever they try to propose legislation.
U.S. regulators are confident that the presence of a number of new regulations could give investors confidence to use cryptocurrencies, as well as consider these assets to invite risks to financial stability due to their rapid growth.
For now, several supervisors including the Financial Stability Oversight Council are monitoring how stablecoin transactions are processed and at the same time gathering views on whether these assets belong as an economic threat or not.
The report will then be reviewed by the President’s Working Group on Financial Markets that includes several financial and securities organizations, as well as individuals such as Treasury Secretary Janet Yellen, Federal Reserve (The Fed) Chairman Jerome Powell, and Securities and Exchange Commissioner (SEC). Gary Gensler.
For the record, all three individuals have spoken out about the strict legislation on stablecoin.
The New York Times revealed the following are options that supervisors could potentially impose on stablecoin:
Assets that invite risk to the system under the Dodd Frank Act.
‘Securities’ assets as previously claimed by Gensler. If so, it will be under SEC scrutiny.
Consider stablecoin as a money market mutual fund which is bound by existing laws.
Regulate stablecoins just like banks. This will cause stablecoins to be under the surveillance of the Office of the Currency Controller (OCC).
Generate central bank digital currency (CBDC) as a competitor.
