EXCLUSIVE U.S. Treasury and financial industry debate “stable currency” of cryptocurrencies

WASHINGTON, Sept. 10 (Reuters) – The U.S. Treasury Department met this week with several industry participants to ask them about the risks and benefits of stablecoins, a rapidly growing type of cryptocurrency. whose value is related to traditional coins, according to three people with direct knowledge of the meetings.

Washington policymakers are alarmed by the rapid growth of the cryptocurrency market, which topped a record $ 2 trillion in April. As of Friday, the stable currency market cap stood at approximately $ 125 billion, according to industry data site CoinMarketCap. It is unclear what financial regulations apply to these relatively new products.

U.S. financial regulators are working to understand the risks and opportunities that cryptocurrencies present for the traditional U.S. financial system and plan to issue several reports on the issue in the coming months, they said.

In July, Treasury Secretary Janet Yellen said the government should move quickly to establish a regulatory framework for stablecoins. Read more

As a sign that these efforts are on the rise, Treasury officials met this week with financial industry executives to discuss possible regulation of the stable currency, the three sources said.

Two of the people said that at this week’s meetings, one of which took place on Friday, officials asked if stablecoins would require direct oversight if they became extremely popular. They also discussed how regulators should try to mitigate the risks of too many people trying to charge their stable currencies at the same time and whether major stable currencies should be backed by traditional assets.

Officials also asked about how stablecoins should be structured, how they could be used, whether the current regulatory framework is sufficient and other security and soundness issues, one of the people said.

Treasury officials also met earlier in the week with a group of banks and credit unions to discuss similar issues, another person said. Treasury officials seemed to gather information and did not share their thoughts on how stable currencies should be regulated, the person added.

The information gathered at this week’s meetings is likely to help shape a comprehensive Treasury report on the stables expected in the coming months.

In a statement, Treasury spokesman John Rizzo said the department is examining “the potential benefits and risks of stablecoins for users, markets or the financial system.”

“As this work continues, the Treasury Department meets with a wide range of stakeholders, including consumer advocates, members of Congress and market participants,” he added.

Washington policymakers are concerned that the rise in privately operated currencies could undermine control of financial and monetary systems, increase systemic risks, promote financial crime, and harm investors.

The U.S. Securities and Exchange Commission, the Commodity Futures Trading Commission, the Federal Reserve and the Office of the Currency Controller are also working on cryptocurrency projects, they said.

Written by Michelle Price; edition by Lauren LaCapra and David Gregorio

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