The Biden administration is reportedly considering a new legal framework for stablecoin issuers that would put them in the same category as banks, raising questions about the future of crypto regulation in the country.
Citing people familiar with the matter, The Wall Street JournalFriday that the administration is looking to convince Congress to create a new “special-purpose charter” for stablecoin issuers and other companies that fall within the same category. Although it’s not entirely clear how the legislation will look, it’s expected to be tailored specifically to these types of business models.
Policymakers have beenin recent months because they believe these dollar-pegged assets aren’t properly regulated. Earlier this week, told the Financial Services Committee that stablecoins like Tether ( ) and USDC Coin ( ) should be regulated within the same parameters as money market funds like bank deposits. Nevertheless, he remained steadfast in stating that no blanket ban on Bitcoin ( ) or other digital assets was in the cards.
As Cointelegraph reported in July, joint research by the Fed and Yale University outlinedin a 49-page paper called, “Taming Wildcat Stablecoins.” In that paper, the authors argued that policymakers have only two choices with respect to stablecoin regulations: make them equivalent to public money or tax them out of existence via central bank digital currency.
Stablecoins — digital currencies that are wholly or in part pegged to a form of fiat money like the U.S. dollar — have swelled to become a $128 billion market,to the latest market capitalization figures. Tether accounts for over a half of the total market, though competitors such as USDC and Binance USD (BUSD) have made significant headway this year. As these markets have grown, concerns over the liquidity and reserve status of stablecoin issuers have made eye-grabbing headlines.
After reaching a settlement with the Office of the New York Attorney General, Tether Holdings Ltd. agreed to publish periodic reports proving its currency reserves. In May of this year, the company.