On July 16, 2021, Treasury Secretary Janet Yellen announced that the President’s Financial Markets Task Force (PWG), the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation (FDIC) would all meet to discuss the interagency work. on stable coins on July 19. A stable coin is a type of cryptocurrency that is backed by a reserve asset, which could be a fiat currency like the US dollar, gold, or other cryptocurrencies, and which attempts to provide more stability. prices relative to the volatility often present in other cryptocurrencies.
The objective of the meeting and the PWG is to review the current stablecoin regulation, identify existing and potential risks and develop recommendations to address those risks. The meeting aims to build on the PWG of December 2020 “Statement on the main regulatory and supervisory issues relating to certain stable coins” (the statement”). The statement provided the following initial assessment on key regulatory and supervisory considerations regarding stablecoins:
- United States promotes responsible payment innovations
- Stablecoins must comply with applicable legal, regulatory and supervisory requirements in the United States, including, but not limited to, “safety and soundness, anti-illicit funding, end-user protection and market integrity ”
- Participants and stablecoin arrangements must comply with all applicable anti-money laundering and terrorist financing (AML / CFT) and sanctions obligations, including potential registration with the Financial Crimes Enforcement Network (FinCEN) of the Department of the Treasury, implementing an effective AML program, and complying with record keeping and suspicious activity reporting requirements
- Certain stable coins may constitute a security, commodity or derivative subject to U.S. federal securities, commodities and / or derivatives laws.
- Stable coins that are primarily used for retail payments and adopted on a large scale may require additional collateral
- U.S. authorities will continue to assess changing technology and market landscapes as well as the U.S. regulatory framework for stablecoin oversight.
- The authorities will continue a strong international collaboration on issues related to stablecoins
The PWG was created to strengthen the US financial markets and its current members include Secretary of the Treasury Yellen, Chairman of the Federal Reserve Board of Governors Jerome Powell, Chairman of the Securities and Exchange Commission (SEC) Gary Gensler and the Acting Chairman of the Commodity Futures Trading Commission (CFTC) Rostin Behnam.
A press release of Secretary Yellen’s July 16 announcement is available here.