The Vice Chair of Supervision at the Federal Reserve, Michael Barr, upholds the need to make stronger regulations in the stablecoin policies that the US currently follows. It is to ensure that the investors are protected and to imply the designed regulations that address the present concerns.
Michael Barr said that stablecoins borrowed the trust of the Federal Reserve and that private money should be regulated properly and these regulations should permit the Fed to enforce the policies and give approval to the compliant issuers, in the required way. He was talking at the 7th Annual D.C. Fintech Week. Also, he mentioned that the stakeholders were calling for a stable framework in the stablecoin regulation as they are digital assets that are pegged to the US dollar and other fiat currencies. It is also to note that these digital assets have a wide group of users and their circulation has also increased, massively, recently.
The need for stablecoins regulation has been a topic of discussion even before this and previously, the existing concerns were expressed in a congressional meeting. The congress was expected to discuss this and to come up with a framework and develop associated rules with the help of the leading professionals in the field. As a result, a stablecoin bill was proposed by The House Financial Services Committee, which was received with acceptance as well as criticism.
Draft Bill On Stablecoins
It was on April 18 that the House Financial Services Committee held a hearing on this which included Gary Gensler, the Chairman of the SEC. The new bill was drafted after this. However, Congress seemed to be divided on the bill as some demanded amendments in the proposed bill.
Jake Chervinsky, the Chief Policy Officer of Blockchain Association, talked about the development and the growth of the stablecoin and that stablecoins have the potential to revolutionize the payment system and reinforce the dominance of the US dollar if they are placed under the right policies. He added that the implementation of the right policies and the taking of the US dollar to the top was crucial especially when foreign adversaries such as China were making attempts to undermine the strength and status of the USD as the global reserve currency.
The then-drafted bill proposed to bring the non-financial institution stable coins under the control of the Federal Reserve Board. It also proposed to impose a fine that can be up to 1 million US dollars and up to 5 years of prison time for those who release unauthorized stablecoins.
Stablecoin Regulations Around The Globe
However, the US is not the only government that is calling for stablecoin regulations. Recently, the UK has also focused on this as the Bank of England with the Financial Conduct Authority (the FCA) says that the need to implement stablecoin regulations is becoming high as many of them seem to have the potential to already pose a threat to the financial system of the country. The FCA also has plans to implement regulations on stablecoins that are fiat-backed.