US Treasury calls for urgent legislation on stablecoins

The potential for the increased use of stablecoins as a means of payments raises a range of concerns, the report note, related to the potential for destabilising runs, disruptions in the payment system, and concentration of economic power.

“The absence of appropriate oversight presents risks to users and the broader system,” says Secretary of the Treasury Janet L. Yellen. “Current oversight is inconsistent and fragmented, with some stablecoins effectively falling outside the regulatory perimeter. Treasury and the agencies involved in this report look forward to working with Members of Congress from both parties on this issue. While Congress considers action, regulators will continue to operate within their mandates to address the risks of these assets.”

To address risks to stablecoin users and guard against stablecoin runs, the legislation should require stablecoin issuers to be insured depository institutions, require custodial wallet providers to be subject to appropriate federal oversight. and meet appropriate risk-management standards, the report contends.

Supervisors should have authority to implement standards to promote interoperability among stablecoins, states the report. In addition, Congress may wish to consider other standards for custodial wallet providers, such as limits on affiliation with commercial entities or on use of users’ transaction data.