According to a report by Bloomberg, The SEC has already opened the way to put limits on stablecoins and is evaluating new rules.
The United States Securities and Exchange Commission, SEC, won concessions in a debate among US regulators on how to monitor stablecoins, clearing the way for the body to crack down on the $ 131 billion market. This was reported Bloomberg in exclusive note.
He noted that the Treasury Department and other agencies will specify in a highly anticipated report, which is expected to be released this week, that the SEC has significant authority over tokens such as Tether, people familiar with the matter told the news agency.
The report will also urge the Congress to pass legislation specifying that currencies should be regulated similarly to bank depositssaid one of the people, who asked not to be named because the discussions are private.
The recommendations could strengthen the SEC’s ability to carry out compliance policies and actions for stablecoins.
The report adds that the reviews make it clear that the government will take an active role in regulating stablecoins even while waiting for longer-term plans to be implemented. For industry executives, the successful lobbying of SEC Chairman Gary Gensler is likely bad news because they already argue that their agency has overreached.
Early versions of the report asked legislators to pass legislation that, among other things, It would create a new type of bank charter for companies that issue stablecoins. In recent weeks, Gensler lobbied to clarify that the SEC has existing powers to oversee tokens when they are involved in investment transactions, the people said. Any bill faces great difficulties in a divided Congress and could take years to enact.
The report will also reaffirm that the Commodity Futures Trading Commission has a role in monitoring stablecoins.
Spokespersons for the SEC, the CFTC and the Treasury declined to comment on the report to Bloomberg.
Financial regulators are increasingly concerned about the risks that tokens pose to the financial system following the rapid growth of the sector. Tether’s market value has grown to nearly $ 70 billion from $ 21 billion at the end of 2020, according to CoinMarketCap.com. For its part, USD Coin, the second stablecoin largest, it increased to $ 32.6 billion from $ 3.9 billion last year.
Stablecoins play a crucial role in the cryptocurrency market. Its value is tied to other assets, such as the US dollar, and companies generally agree to hold reserves that ensure investors can exchange the tokens for normal currency.
The authorities are already cracking down. In February, Tether settled with the New York Attorney General over allegations that he lied about the reserves that backed the currency. The Commodity Futures Trading Commission earlier this month he ordered Tether pay USD $ 42.5 million for similar claims.
Threat to the economy
The pending report is being prepared by the President’s Working Group on Financial Markets with the aim of ensuring that stable currencies do not threaten the economy and he wants to clarify how the Biden administration will regulate the sector in various agencies that are likely to have a role. The group is also likely to propose that the Financial Stability Oversight Board, another board of regulators, formally assess whether the tokens pose a systemic risk.
“You are not helping the system at all if what is called a stable currency is actually not stable, so you don’t want to allow that kind of risk to build up,” said the undersecretary of the Treasury of National Finance, Nellie Liang, at a conference hosted by the Georgetown University Law Center last week.
Gensler has previously said that Many stablecoins, which sometimes invest in corporate bonds and other assets, resemble money market mutual funds and could fall under your authority. The SEC is investigating some tokens, including one started by Coinbase Global Inc. and Circle Internet Financial Inc.
Representatives of some stablecoins, including Circle and Paxos Trust Co., they have said they support bank-like regulation.
On the contrary, some investor advocates have lobbied officials to emphasize the powers of regulators rather than recommend that Congress take action, given how long that process can take. The Americans Educational Fund for Financial Reform sent a letter on October 19 to Treasury Secretary Janet Yellen, expressing “alarm”That the report might suggest the legislative path.
One of the things regulators fear the most is a sudden, unregulated spike in public adoption of stablecoins, a possible scenario if a tech giant like Facebook Inc. issues a token. The proposal of Facebook to launch the token Diem has not yet been fulfilled.
Translation and version of DailyBitcoin
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