Thanks to the growing influence of stablecoins on the financial system, regulators across the world are racing to regulate the sector.
The stablecoins realm is a step closer to achieving regulatory clarity as the US Securities and Exchange Commission [SEC] has geared up to propose legislation and supervise the $131 billion industry.
US Financial Watchdog Readies Stablecoin Regulations
Citing sources familiar with the matter, Bloomberg reports that developments surrounding SEC’s authority over stablecoin legislation will be announced formally this week by the Treasury Department.
The cumulative market cap of stablecoins has far exceeded the expectations since the beginning of the year. This cohort of the industry has been away from meaningful regulation. The rapid growth and restricted transparency have managed to attract significant scrutiny worldwide. But the upcoming report is expected to shed some light on the regulatory authority of the Commodity Futures Trading Commission [CFTC] and Treasury Department concerning the cryptos pegged 1:1 to fiat currency such as Tether [USDT]. In addition to the inclusion of these agencies, the report in question will also seek to clarify how Congress plans to regulate the stablecoin sector.
Behind the scenes, it was Chairman Gary Gensler who has been pressing the lawmakers for authority and other changes. In an interview with the Washington Post in late September, Gensler compared these tokens to poker chips at a casino.
Stablecoin-Induced Transformation of Payment Landscape
US regulators aren’t the only ones working towards establishing oversight of the stablecoin market. Several financial institutions, including the International Organization of Securities Commissions [IOSCO] and Committee on Payments and Market Infrastructures [CPMI], have been examining ways to accommodate standards for stablecoins.
CPMI Chairman and Deputy Governor for Financial Stability at the Bank of England, Sir Jon Cunliffe, had earlier stated,
“The payments landscape has undergone rapid transformation in recent years and continues to evolve at pace. This is happening at the same time as financial innovation offers the prospect of new payment services and greater competition in payments but also potential risks to the financial system.”
The SEC has been known for its tough stance on the cryptocurrency industry, in general. But proponents, such as MicroStrategy’s Michael Saylor, believe that stablecoin regularity clarity is likely to accelerate the adoption of the Bitcoin [BTC].