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US Treasury discussing on cryptocurrency ‘stablecoins’

The U.S. Treasury department is working on understanding the nature of cryptocurrency, as they are discussing with the market participants.

Cryptocurrency
Phot By "CryptocyNews.com"

The U.S Treasury Department has met with some industry participants this week. They are taking quizzes to understand the risks and benefits that the cryptocurrency ‘stablecoin’ poses. Stablecoins are one of the rapidly growing types of cryptos. The value of such cryptos has pegged to the traditional currencies according to three people with knowledge of these meetings.

Washington policymakers have received alarms at the rapidly growing market of cryptocurrency. It has exceeded a record of $2 trillion in April. On Friday, the value of the stablecoins was standing roughly at the mark of $125 billion, as per the data of CoinMarketCap. It is still unclear which financial regulations will apply to these new products.

U.S Financial regulators are now working to understand the risks and opportunities of cryptocurrencies. They are trying to understand what affects the traditional U.S. financial system and can plan for issuing several reports on it.

The Treasury Secretary of the U.S, Janet Yellen, said that the government must move much quicker to build up a regulatory framework for stablecoins.

Hence, such efforts are taking place. Treasury officials this week will meet the financial industry executives. They will discuss the potential regulation for stablecoins.

In one of the meetings, officials asked whether the stablecoins will require direct oversight if they become popular or not. They discussed how regulators need to mitigate the risks for too many people trying to cash their stablecoins at one time. Also, they asked if the major stablecoins needed a backup of traditional assets or not. Officials have met with a group of banks and credit unions to discuss similar issues. Treasury officials gathered information and have not yet shared their thinking on how stablecoin needs to be regulated.

Such information will help to shape the broad Treasury reports in upcoming months. In a statement, the spokesperson of the Treasury Department, John Rizzo, said the department is examining “potential benefits and risks of stablecoins for users, markets, or the financial system.”

The Treasury Department is also meeting a broad range of stakeholders such as consumer advocates, market participants, and members of congress. Washington policymakers are worrying about the rise of private currencies, which can undermine their control over the financial and monetary system. It can increase the systematic risks and can further promote financial crime. It will hurt the investors.

The U.S. Securities and Exchange Commission, the Commodity Futures Trading Commission, the Federal Reserve, and the Office of the Comptroller of the Currency are together working on projects related to cryptocurrency.

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