A group of leading US financial regulators has released a new statement on stablecoins.
As one of the main topics of crypto regulation news this year, stablecoins were the main topic of a Dec. 23 statement by the President’s Working Group on Financial Markets (PWG). The PWG includes agents from the Treasury Department, the Federal Reserve, the Securities and Exchange Commission, and the Commodity Futures Trading Commission.
The statements of the group were hardly revolutionary and stated above all that the issuers of stable coins must comply with all the typical rules of road traffic with regard to financial law. Regulators say stablecoin must have systems in place to meet all applicable anti-money laundering requirements before they hit the market.
In addition, regulators have not said that stable coins are necessarily currencies or commodities that are less regulated than securities or derivatives. Instead, they left the question open:
“Depending on its design and other factors, a stablecoin can represent a security, commodity, or derivative that is subject to US federal securities, commodity, and / or derivatives laws.”
The announcement quoted Deputy Treasury Secretary Justin Muzinich as saying, “The declaration reflects a commitment to both promoting the important benefits of innovation and meeting critical goals related to national security and financial stability.”
It’s a common refrain among regulators handling new technology, but especially among those changing the way money works: Responsible Innovation. Here, however, it is interesting to note that stable coin projects make it clear that certain systems will be installed prior to launch.
Speaking of today’s statement, Assistant Currency Auditor Brian Brooks said:
“The group struck a productive balance by recognizing the valuable and vital role stablecoins play in our national and global economies and the need to ensure that such financial instruments do not add to crime or national insecurity.”
Although the PWG is fairly mild, it describes a softer approach to stablecoin than some others. A bill recently published by Representative Rashida Tlaib sparked outrage in the crypto community over the willingness to approach node operators as money service providers.
Similarly staggering to the crypto industry was an example of the Treasury itself creating rules at midnight in an attempt to make self-hosted wallets subject to travel rule thresholds in order to keep records of ownership.