As regulatory pressure mounts in the U.S., policymakers are putting stablecoins at the top of their agendas.
Citing “people familiar with the matter,” Bloomberg has reported that officials are crafting a policy framework set to be released in the coming weeks. Their primary concern is ensuring that investors can reliably move money in and out of tokens, it added.
The anonymous insiders are worried that a “fire-sale run on crypto assets could threaten financial stability and that certain stablecoins could scale up dangerously fast.”
Strengthening Regulatory Efforts
The Financial Stability Oversight Council is also preparing a formal review into whether stablecoins pose an economic threat.
The officials are focusing on how stablecoin transactions are processed and settled and whether market conditions have an impact, it added. Tomicah Tillemann, global head of policy at a crypto fund run by venture capital giant Andreessen Horowitz, commented:
“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.”
The report, when released, will go to the President’s Working Group on Financial Markets. The body includes key agency heads such as Treasury Secretary Janet Yellen, Federal Reserve Chair Jerome Powell, and Securities and Exchange Commissioner Chair Gary Gensler.
In late July, Yellen called for urgency in regulating stablecoins after stating that they are not adequately supervised. Gary Gensler echoed the sentiment in early August, stating that regulators must act to protect investors from fraud.
Also, in late July, Acting Comptroller of the Currency, Michael Hsu, said regulators are looking into Tether’s commercial papers to see whether each USDT token was really backed by the equivalent of one U.S. dollar.
Tether has repeatedly issued assurances that its reserves are fully backed but has yet to produce a full independent audit.
Stablecoin Ecosystem Update
Tether remains the market leader with a current supply of 69.4 billion, according to the Tether Transparency report. This is close to the all-time high for USDT, which tapped 70 billion earlier this week.
Of that total, 36 billion or 51.8% is based on the Tron network, with 33.8 billion or 48.7% running on Ethereum. USDT supply has grown by 232% since the beginning of the year.
Rival stablecoin, USDC, from Circle currently has 29.3 billion in circulation after gaining 651% in terms of supply growth so far in 2021.
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