Biden cabinet threatens congress, digging for Crypto federal supervision

Biden cabinet threatens congress, digging for Crypto federal supervision

In a widely anticipated study published Monday, a group of US authorities asked legislators to subject stablecoin issuers to the same stringent federal monitoring as banks.

According to the President’s Workgroup on Financial Markets, Congress should also compel custodial wallet suppliers to be supervised by a governmental department and limit stablecoin issuers’ dealings with non-financial businesses such as tech or telecom providers. The latter seems to be intended specifically at Diem, formerly Libra, the contentious stablecoin project launched by Meta, the social networking behemoth once renowned as Facebook.

“I think the business and authorities alike believe that without the precautions, we may miss out on the possible benefits of financial innovation,” Treasury Under Secretary for Domestic Finance Nellie Liang told CoinDesk. “So I think there’s a shared understanding of the need for a structure that isn’t overly burdensome, gives safeguards, and can keep innovation moving forward.”

If Congress does not adopt such legislation, the government regulators have the ability to take their own actions. The group, on the other hand, appeared to desire that it not happen.

The report is part of a growing attempt by officials to rein in this $138 billion area of the larger cryptocurrency world in order to limit the risks that stablecoins are perceived to pose to consumers, markets, and the monetary sector. Stablecoins, or cryptocurrencies linked to the value of some other asset, such as the US dollar, have grown rapidly in the previous two years, despite ongoing concerns regarding their security.

“We feel legislation is critical,” Liang stated. “This is a brand-new technology, a brand-new innovation.” It’s not unexpected that the existing administrative regime isn’t prepared to deal with some of the novel types of hazards that this could create.”

Congress may well be willing to take action. Representatives from both the Republican and Democratic parties have been debating how to regulate cryptocurrency in general, and stablecoins especially, according to Liang.

Monday’s presentation focuses on stablecoins and how they would perform if regulated like banks. However, the references suggest that the Biden presidency may have more to say.

One such remark stated that the presidency will continue to review virtual currencies and blockchain technologies in general, underlining how the report published today is limited to stablecoins.

While the analysis mentioned DeFi and non-bank inspectors, it also indicated at more concrete plans or recommendations regarding these facets of the cryptocurrency market and regulations.

“While the scope of this study is confined to stablecoins,” the article demonstrated, “work on digital assets and other breakthroughs linked to cryptographic and distributed ledger technology is ongoing throughout the Administration.”

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