Yellen stressed to THE PWG the need for swift action on the regulation of the stable currency with the aim of ensuring that the United States has an appropriate regulatory framework, according to a Treasury statement released Monday. The PWG, which includes the Treasury, Federal Reserve, Securities and Exchange Commission and Commodity Futures Trading Commission, is expected to issue guidance recommendations in the coming months. U.S. Treasury Secretary Janet Yellen met with the PWG on Monday to discuss interagency cooperation on stabilizing currency regulation. The officials included SEC Chairman Gary Gensler, Federal Reserve Chairman Jerome Powell, CFTC Acting Chairman Rostin Behnam, and the heads of the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. At the meeting, officials discussed stablesoin's rapid growth, its potential use as a means of payment, and potential risks that could pose to end users, the financial system, and national security, according to the statement. In May, the stablecoin market cap crossed the $100 billion mark, raising alarm bells among regulators, particularly about the lack of oversight and transparency. In fact, it was fed Chairman Jerome Powell who spoke at a hearing of the House Financial Services Committee last week about the regulation of the stablecoin. According to Bloomberg, Powell compared stablesoin to bank deposits or money funds, both of which are heavily regulated with reporting and auditing requirements designed to protect consumers and thus maintain the stability of the financial system. Currently, stablesoin issuers in the United States are primarily the responsibility of state regulators. However, the fact that a number of federal-level regulators were represented at this conference demonstrates the importance the U.S. government attaches to stablecoin regulation.
"That said, the Treasury did not give much away in this statement. It is understood that the Ministry of Finance presented a report on the regulation of the Stablecoin, which is still pending. "There's not a lot of information out there about how stablecoins work and what's behind them," said Matthew Frankle, a partner at law firm Haynes & Boone at
. As a result, Matthew Frankle argues, the main purpose of regulators is likely to remain around how to provide safety for consumers. He added that the new rules may cut into stablecoin issuers' profits in the short term, but in the long term compliance should help them attract more users.