Crypto body lobbies US on stablecoin push: ‘It’s really important we get this right’. One of the cryptocurrency industry’s largest lobbying groups has released a wish list of what it believes. What stablecoin regulation should look like, as the cryptocurrency community awaits. The Biden administration’s ideas on how to regulate stablecoins.
Bitcoin and other cryptocurrencies have their values tied to fiat currencies such as the U.S. dollar. Precious metals, or short-term securities, are known as stablecoins, and they are a solution to reduce volatility. The inherent volatility of digital coins. They are used by traders to enter and exit transactions, and they are increasingly being utilized. For more typical banking products such as savings accounts, despite the fact that they are subject. To little regulatory scrutiny and is not insured by the FDIC.
The Chamber of Digital Commerce, in a new 17-page letter to top officials at the United States Treasury. Federal Reserve, and Securities and Exchange Commission, argues that stablecoins. Under federal securities law, they should not be treated as securities or money market funds.
According to the organization, which includes major stablecoin issuers such as Binance. The asset class should instead be regulated as payment systems by standardizing the current system of oversight. Using money transmission licensing laws applied at the state level, rather than as a financial asset.
The company’s executive committee includes representatives from the United States. Circle, and more traditional financial firms like Citigroup and Mastercard.
Perianne Boring, founder and president of the Chamber of Digital Commerce. Stated that stablecoins are a crucial component of the crypto body ecosystem, and that any new legislation. Regulations must ensure that this technology continues to expand in a sustainable manner.
Watching and waiting for guidance
President Joe Biden’s Working Group on Financial Markets (PWG), which includes the Treasury. Federal Reserve, Securities and Exchange Commission, and other major U.S. financial authorities. Scheduled to produce a report soon with suggestions for a regulatory framework for stablecoins.
Bloomberg reported this week that the SEC will have major regulatory jurisdiction over stablecoins. However, according to a source familiar with the report, the SEC will not given additional jurisdiction. To monitor stablecoins, and will instead reiterate what it already has.
Stablecoins may regulated under new rules similar to those that govern money-market funds. As well as new banking rules, according to regulators.
Stablecoins should regulated as digital payment systems. Rather than investments or securities, according to the Chamber. Because they settle transactions instantly using blockchain technology.
According to the organization, in order for an investment contract to meet the definition of a security. There must be a reasonable prospect of profit. In similar line, they said that stablecoins not intended. To depreciate in value and do not contain a profit expectation.
“If stablecoins are categorize as securities. Their use as retail payments will restricted,” Boring said.
Despite this, SEC Chair Gary Gensler has compared stablecoins. To casino chips, telling Yahoo Finance at the All Markets Summit this week. That crypto is like “the Wild West,” and has urged regulators. To grant the SEC more ability to regulate them.
Federal government should offer the option
The Chamber advises the federal government to allow but not impose national bank charters. The OCC has given preliminary conditional permission to some virtual crypto body currency enterprises.
The business also rejects regulating stable coins as money market funds, claiming they aren’t money market funds. And employed as passive investment vehicles. Most stablecoins used for digital payments and do not increase in value.
The rapid rise of the stablecoin market has made regulators mindful of systemic danger. It is now worth over $130 billion, up from $37 billion at the start of 2021, with Tether (USDT-USD). BinanceCoin (BNB-USD), and Paxos being the most popular.
While rapidly expanding. The worldwide stablecoin market is still small compare to the $5 trillion US money market fund market.
According to the letter to authorities, stablecoin regulation should customized. To the risk profiles of various stablecoin payment systems.
“Federal regulators should explore further protections only when stablecoin payment mechanisms. As it widely deployed nationwide,” it said.
Like airline miles or Starbucks gift cards, the Chamber also claims most stablecoin payment methods are small.