US Federal Regulators Weigh in on Expectations for Stablecoin Issuers
A group of major US financial regulators has released a new statement on stablecoins. One of the main topics of this year’s crypto regulation news, stablecoins were the main topic of a Dec. 23 statement from the Presidential Working Group on Financial Markets. The PWG includes representation from the Treasury, the Federal Reserve, the Securities and Exchange Commission, and the Commodity Futures Trading Commission.
US regulators warn on stablecoin regulation for money laundering, reserve requirements
The members emphasized that digital payment systems should operate responsibly.
The views expressed by the group were not revolutionary, mostly saying that stablecoin issuers would have to abide by all the typical laws of the way in terms of financial law. Regulators say stablecoins must have systems in place to meet all applicable anti-money laundering requirements before going on the market.
Furthermore, regulators did not say that stablecoins are necessarily currencies or commodities, subject to less aggressive regulation than securities or derivatives. Instead, they left the question open. According to them, a stablecoin may constitute security, a commodity, or a derivative subject to US federal securities, or derivatives laws. It depends on its designs and other factors.
Justin Muzinich, Undersecretary of the Treasury, affirmed that the statement reflects a commitment both to promoting the essential benefits of innovation. Besides, it aims to achieve critical goals related to national security and financial stability.
What opinion do regulators share?
It is a repeated verse among regulators who handle new technologies. It is especially true about the ones that alter money’s function, which is a responsible innovation. But here it is interesting to note a clear expectation that stablecoin projects have certain systems in place before launch.
Brian Brooks, the Acting Comptroller of the Currency, said in a statement that the group reached a productive balance. It recognized the valuable and vital role that stablecoins play in national and global economies. Besides, it identified the need to ensure that such financial tools do not contribute to a crime or national insecurity.
Despite being quite soft, the PWG describes a gentler approach to stablecoins than others. A recent bill by Representative Rashida Tlaib sparked outrage among the crypto community to target node operators as money service providers.
Similarly, jarring for the industry was a midnight regulatory instance from the Treasury itself. It sought to subject self-custodial wallets to Travel Rule thresholds to maintain a record of ownership.
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