The debate over how to regulate crypto assets is heating up, with the stablecoin market exceeding $100 billion last month.
Last week, Federal Reserve Chairman Jerome Powell warned that stablecoins are quickly growing but remained unregulated. This week, the President’s Working Group on Financial Markets, composed of senior U.S. financial officials, will investigate stablecoins.
At the same time, Gary Gensler, the U.S. Securities and Exchange Commission chair, has stated that stablecoins and other security-backed tokens would not be excluded from the regulator’s impending rule revisions.
On Wednesday, Gensler told the American Bar Association Derivatives and Futures Law Committee’s virtual mid-year program that stablecoin issuers would need to register with the SEC and maintain certain levels of transparency in their transactions.
Furthermore, Gensler stated that the SEC would impose a slew of additional regulations for capital and margin, involving internal governance structure, monitoring, chief compliance officers, trade acknowledgment and confirmation, record-keeping, and reporting procedures.
Stablecoins, such as Tether, linked to an asset such as the dollar, have drawn more scrutiny from authorities due to their potential to destabilize payment networks.
Transparency is a hot subject in the crypto-space, owing to the popularity of digital tokens, which are popular due to their decentralized nature and their users’ total anonymity.
However, U.S. officials have begun to crack down on some parts of the crypto market to prevent the use of these currencies in illegal activity. The SEC also sued Ripple Labs late last year over sales of its network’s XRP coin, which the agency deemed to be a security rather than a currency.