The U.S. Treasury is preparing a raft of recommendations for stricter oversight of Tether and other stablecoins, as unnamed insiders say the department has identified the greatest risks posed by the tokens, according to a recent Bloomberg report.
Fast facts
- Making sure investors are able to transfer money in and out of tokens is a top priority of the treasury as it prepares to unveil the recommendations in the coming weeks, the sources said. The department also expressed concern over the stability of the crypto market if there were a widespread, fire-sale run in the industry, and that stablecoins are capable of scaling up incredibly quickly.
- This report follows recent testimony this week from U.S. Securities and Exchange Commission chair Gary Gensler before the Senate Banking Committee, where he suggested that many cryptocurrencies — including stablecoins — are indeed securities. Suggesting greater regulation of the industry is required, Gensler had also said earlier this month stablecoins may enable bad actors to “sidestep” public policy goals.
- U.S. Treasury Secretary Janet Yellen has also voiced her concern about stablecoins in the past, saying in July the U.S. must “act quickly to ensure there is an appropriate U.S. regulatory framework in place.”
- The two largest stablecoins, Tether’s USDT and Circle’s USDC, are the fifth and tenth largest cryptocurrencies with a market cap of US$68 billion and US$29 billion, respectively, according to CoinMarketCap.