US Treasury to give SEC new authority over stablecoins
A report expected this week by the US Treasury Department and other agencies will imply that the SEC has extensive jurisdiction to regulate cryptos pegged 1:1 to traditional currency, according to a Bloomberg piece on Monday citing people familiar with the situation.
The report will ask Congress to explain how stablecoins should be regulated similarly to bank deposits. State Dept. of Treasury and other federal agencies have taken a step closer to establishing major stablecoin oversight.
After consistently referring to stablecoins as "poker chips," SEC chief Gary Gensler has pushed for adjustments behind closed doors. The SEC's authority to pursue enforcement actions and policies for stablecoins and crypto assets may be boosted as a result of the suggestions.
Following the sector's rapid growth, financial regulators have become increasingly concerned about tokens' impact on the financial system.
This year has seen significant growth in stablecoin market capitalization, and the market cap of Tether (USDT) has exploded by 229% since the start of the year to reach $69.5 billion. USD Coin, which is ranked second in terms of market capitalization, has also seen extraordinary growth, with its capitalization growing 706% to $32.52 billion to date.
The value of stable coins value is backed by other assets, like the US dollar, and companies typically commit to maintaining reserves that guarantee investors can exchange the tokens for regular currency.
Authorities are already taking action. Tether reached an agreement with the New York Attorney General in February to address claims that it misrepresented the reserves underpinning the token. Tether was sentenced to pay $41 million by the Commodity Futures Trading Commission earlier this month for similar charges.
Since April of this year, Gensler has indicated on multiple occasions that he is ready to expand regulations on stablecoins and the decentralized financial markets they enable. According to him, the rapidly expanding asset class "may help facilitate those seeking to sidestep a host of public policy goals" and even compromise national security.
CBW - External Analyst