Regulators ask Congress for New Crypto Rules

Regulators ask Congress for new crypto rules. Stablecoins are a type of cryptocurrency that is rapidly gaining popularity. And federal regulators warn that unless Congress acts quickly. Bank runs, consumer abuse, and payment snafus will occur. This is according to a report released Monday by the Treasury Department. Which stated that more power from Congress is urgently needed to properly regulate stablecoins.

The report, which was produced by the President’s Working Group on Financial Markets. It is called on Congress to approve legislation that would subject stablecoin issuers. To the same regulatory requirements as traditional banks and financial institutions. Among other recommendations. Such a move would need the establishment of enough reserves. By those institutions in order to meet the demands of customers. Who wish to pay out their funds as promptly as possible.

The request for congressional action comes at a critical juncture in the cryptocurrency industry’s development. Which is surging in popularity despite the fact that the federal government. Has only limited authority to oversee it.

Stablecoins, which are ostensibly pegged to the value of a stable reserve asset such as the dollar. Have not always proven to be as securely backed as companies claim, according to a Treasury report. Which warns that this could cause significant problems for customers. Also, investors, and the financial system as a whole.

According to the paper, several regulatory powers are already in place. Including the capacity of the Securities and Exchange Commission. And other federal agencies to regulate certain stablecoin issuers, among other things.

After months of research on the mounting risks of stablecoins

While working with the President’s Working Group on Financial Markets for several months. The leaders of the group determined that there were regulatory gaps that needed to be addressed by legislators. Thereby delegating the problem to the House of Representatives.

“With the rapid expansion of stablecoins, the urgency of this task has increased.” It is according to the study, which produced by the President’s Working Group. The Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency, among others.

Users, the financial system, and the larger economy are all at risk if we do not move quickly. To prevent the growth of payment stablecoins without providing proper safeguards.”

Stablecoins now valued more over $130 billion, a significant increase from the $28 billion worth. That were in circulation in January. The cryptocurrencies issued by a new generation of financial technology businesses. Such as Tether and Circle, that have emerged in recent years. They are not banks, at least not in the traditional sense, and they are not merely technology corporations. That sell internet-based services. They are able to work in both capacities and have few norms to guide them.

The Treasury Secretary, Janet L. Yellen, said in a statement that “well-designed stablecoins. That are subject to appropriate monitoring have the potential to enable useful payment options.” “However, the absence of sufficient control poses hazards to consumers. As well as the broader system,” says the author.

As a result of its findings, the working group concluded that authority to regulate stablecoin issuers. That would have to come from a law passed by Congress, and that the committee. Could not currently prescribe criteria for digital payments based on stablecoins at this time. 

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