US government considering a structured regulations set for stablecoin issuers

The United States president Biden and his government are reportedly considering a fresh set of regulations for stablecoin issuers.
The United States president Biden and his government are reportedly considering a fresh set of regulations for stablecoin issuers.

The United States president Biden and his government are reportedly considering a fresh set of regulations for stablecoin issuers. The plan is to put them in the same class as banks. This raises the question of the decentralization and the future of crypto regulation in the nation.

The Wall Street Journal, quoting sources that are familiar with the topic, said on Friday that the administration wants to persuade Congress to establish a new “special purpose charter” for stablecoin issuers and other companies coming in that category. While the way the legislation looks is not fully apparent, it should mainly be customized to these types of company models.

In recent months, regulators have raised the alarm at stablecoins since they believe that these dollar accumulation assets need to be adequately controlled.

Earlier this week, Jerome Powell, Chairman of the Federal Reserve, advised the Financial Services Committee that Tether (USDT) and USDC Coin (USDC) stablecoins must be regulated to the similar specifications as money market funds such as bank deposits. However, he was firm in maintaining that there should be no limit or ban on Bitcoin (BTC) or other digital assets.

A recent dig on stablecoins issuers

In July, a 49-page paper titled “Taming Wildcat Stablecoins,” a piece after the Fed and the University of Yale collaborative research, described two regulatory frameworks for stablecoins issuers. In that report, the authors stated that politicians have only two options related to stablecoin regulations: they should make public money equal or impose digital monetary taxation on them through the central bank.

According to the latest market capitalization estimates, the stables – digital currencies which are totally or partly attached to the form of fiat money like the US dollar – swelled to $128 billion.

Tether covers more than 50% of the total stablecoin market. However, its competitors like Binance USD (BUSD) and USDC have grown immensely this year. As the stablecoins are growing fast, the concerns over liquidity and reserve status of the stablecoin issuers are floating all around.
Tether Holdings Ltd. has promised to publish regular reports demonstrating its currency reserves after establishing an agreement with the New York Attorney General’s Office. The company had revealed the complete breakdown of its reserve in May this year.