As regulatory pressure continues to mount in the United States, policymakers are now considering stablecoins as most urgent in their latest regulatory risk assessment.
In a September 16 Bloomberg report, people familiar with the matter confirmed that officials from the United States Treasury are preparing for the creation of a fresh policy framework that would safeguard the functionality of stablecoins.
The legal framework aims to ensure that investors can reliably move money in and out of tokens, with the new policy expected to be launched in the coming weeks. As Bloomberg reported, the new policy has attracted various sentiments from many people within the crypto space, with the publication citing anonymous insiders worried that:
“A fire-sale run on crypto assets could threaten financial stability and that certain stablecoins could scale up dangerously fast.”
Regulatory Efforts Continues
In a related development, the Financial Stability Oversight Council has confirmed preparing a new formal review report that aims to scale any risks if stablecoins pose any economic threat. The oversight authority reportedly focuses on how stablecoin transactions are processed and settled and whether their market conditions have a massive impact on economy.
While airing his stablecoin regulatory concerns, Tomicah Tillemann, the global head of policy at a crypto fund run by venture capital giant Andreessen Horowitz, stated:
“It is significant and very consequential that we are witnessing early steps to create a regulatory framework around digital assets. That’s a big deal.”
Upon completion, the council will submit recommendations to the President’s Working Group on Financial Markets. The working group includes notable heads such as Treasury Secretary Janet Yellen, Federal Reserve Chair Jerome Powell, and Security and Exchange Commissioner Chair Gary Gensler.
The current review on Stablecoin is reportedly the primary implementation of earlier urgent callings from notable heads, including the Treasury Secretary. In late July, Yellen called for urgency in establishing a regulatory framework for stablecoins, asserting that stablecoins are not adequately supervised.
In early August, Gary Gensler reiterated Yellen’s sentiments, stating that regulators must act quickly to protect investors from fraud.
In late July, Michael Hsu, Acting Comptroller of the Currency, urged regulators to embrace a more active role in policing digital assets. Hsu revealed that he was looking at Tether’s commercial papers to verify whether each USDT was fully backed by the equivalent U.S dollar at time.
Tether has repeatedly issued assurances that its reserves are entirely backed, but it has not yet released a comprehensive independent audit.
Stablecoin Ecosystem Update
According to the Tether Transparency report, Tether (USDT) remains the market leader at a current supply of 69.4 billion, with USDT stablecoin nearing the previous record high of 70 billion earlier this week.
Out of the total supply, 36 billion or roughly 51.8% of the Tethers are based on the Tron network, with 33.8 billion or 48.7% running on Ethereum mainnet. Notably, USDT supply has exponentially grown by 232% since the beginning of the year.
Rival stablecoin, USDC, from Circle ranks second with roughly 29.3 billion in supply circulation after gaining 651% in terms of supply growth so far in 2021.