WASHINGTON (Reuters) – The U.S. Treasury Department met with a number of industry participants this week to survey the risks and benefits of stablecoins – a fast-growing type of cryptocurrency whose value is tied to traditional currencies – three people with direct Knowledge of the meetings.
Washington policymakers are alarmed by the rapidly growing cryptocurrency market, which topped a record $ 2 trillion in April. According to industry data site CoinMarketCap, stablecoins’ market cap was around $ 125 billion on Friday. It is unclear what financial rules apply to these relatively new products.
U.S. financial regulators are working to understand the risks and opportunities that cryptocurrencies pose to the traditional U.S. financial system and plan to issue a number of reports on the matter in the coming months, they said.
In July, Treasury Secretary Janet Yellen said the government must act quickly to put in place a regulatory framework for stablecoins.
As a sign that these efforts are gathering pace, finance officials met with financial industry executives this week to discuss possible regulation of stablecoins, the three sources said.
Two of the people said officials this week, one of which was held on Friday, asked if stablecoins would require direct supervision if they became extremely popular. They also discussed how regulators should try to mitigate the risks of too many people trying to redeem their stablecoins at the same time and whether large stablecoins should be backed by traditional assets.
Officials also asked how stablecoins should be structured, how they could be used, whether the current regulatory framework is adequate and other security and solidity issues, one of the people said.
Treasury officials also met with a group of banks and credit unions earlier this week to discuss similar issues, another person said. Tax officials appeared to be gathering information and not sharing their views on the regulation of stablecoins, the person added.
The information gathered at this week’s meetings is likely to help produce a comprehensive Treasury Department report on stablecoins that is expected in the coming months.
In a statement, Treasury Department spokesman John Rizzo said the department is studying “the potential benefits and risks of stablecoins for users, markets or the financial system.”
“During this work, the Treasury Department meets with a wide range of stakeholders including consumer advocates, congressmen and market participants,” he added.
Washington policymakers fear that the rise in privately held currencies could undermine their control over the financial and monetary system, increase systemic risk, fuel financial crime and harm investors.
The U.S. Securities and Exchange Commission, Commodity Futures Trading Commission, Federal Reserve, and Office of the Comptroller of the Currency are also working on cryptocurrency projects, they said.
(Writing by Michelle Price; Editing by Lauren LaCapra and David Gregorio)
Copyright 2021 Thomson Reuters.
source https://www.bisayanews.com/2021/09/13/exclusive-u-s-treasury-financial-industry-discuss-cryptocurrency-stablecoins-technology-news/
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