The Biden administration is considering a new legal framework for stablecoin issuers that would put them in the same category as banks, raising questions about the future of crypto control in the country.
Citing people familiar with the matter, The Wall Street Journal reported Friday that the administration is seeking to persuade Congress to create a new “special purpose charter” for stable coin issuers and other entities within the same category. Although it is not entirely clear what the law will look like, it is expected to be particularly suitable for these types of business models.
In recent months, policymakers have been worried about a stable currency because they believe that these dollar-pegged assets are not properly regulated. Earlier this week, Federal Reserve Chairman Jerome Powell told the Financial Services Committee that stable currencies such as Tether (USDT) and USDC Coin (USDC) should be regulated in the same way as money market funds, such as bank deposits. Nevertheless, he was adamant that blankets were not banned on Bitcoin (BTC) or other digital assets.
In July, Cointelegraph reported that a joint study by the Fed and Yale University outlined two regulatory frameworks for stable coins in a one-page paper, “Taming Wildcat Stablecoins”. In that paper, the authors argued that policymakers have only two choices in terms of stable coin regulation: equating them to public money or paying taxes outside of their existence through the central bank’s digital currency.
Related: The U.S. Treasury is reportedly in talks to control stable coins
According to the latest market capitalization statistics, Stablecoin – a digital currency that is fully or partially associated with a form of Fiat money like the US dollar – has turned into a 128 128 market. Tether accounts for more than half of the total market, although competitors such as USDC and Binance USD (BUSD) have made significant progress this year. As these markets have grown, concerns over the liquidity and reserve status of stable coin issuers have made headlines.
After reaching an agreement with the New York Attorney General’s Office, Teether Holdings Limited agreed to publish periodic reports proving its currency reserves. In May of this year, the company announced its full reserve breakdown for the first time.