Biden admin urges Congress to subject stablecoin issuers to federal oversight like banks and limit their interactions with non-financial companies, such as Meta
If U.S. lawmakers don't act, regulators have the authority to take their own measures, according to the long-awaited report …
CoinDeskNikhilesh De
Context & Ripple Effects
The administration had already been weighing bank-like rules for stablecoin issuers after Democratic lawmakers proposed that issuers obtain a banking charter and Federal Reserve and FDIC approval. The report turns that direction into a direct request to Congress and adds a boundary between issuers and non-financial companies such as Meta.
The significance is not merely a call for disclosure: the proposed framework would place stablecoins within the federal banking perimeter while limiting who can combine payments infrastructure with a major non-financial platform.
First-order effects
Congress faces a defined legislative choice on federal stablecoin oversight, while issuers face the prospect of bank-like supervision rather than a crypto-specific regime.
Meta and other non-financial companies would face constraints on their relationships with stablecoin issuers under the administration's proposed separation rule.
Second-order effects
If Congress does not legislate, the report's assertion of regulators' authority raises the prospect of agency-led measures, leaving issuers to plan around oversight without a single statutory framework.
Stablecoin operators linked to non-financial platforms would need to reassess ownership, partnerships, and distribution arrangements more urgently than issuers organized around financial institutions.
Third-order effects
The proposal points toward stablecoins being treated as payment institutions whose permissible affiliations are governed like those of banks, narrowing the path for technology platforms to embed issuer relationships.
If that perimeter is adopted, competition in stablecoins would increasingly turn on regulatory structure and federal compliance capacity, reinforcing the earlier charter-and-approval approach advanced by lawmakers.
The trend: U.S. policy is moving stablecoins from a crypto-market product toward federally supervised payments infrastructure with tighter separation from non-financial platforms.
Cryptocurrencies should obviously be banned. Let's just stop playing passive aggressive here, crypto is interesting technology used almost entirely by scammers and money launderers. And forcing them to obey the law is the same as banning. https://twitter.com/...
Finally, the US government defines some rules of the road for stablecoins. The document is optimistic, pointing out many benefits of digital assets. The outlook for crypto in America has never looked brighter. Needless to say this is extremely bullish!! https://home.treasury.gov/…
With its stablecoin report, the PWG seems to try to force Congress to choose between handing over regulatory power to bureaucrats or risking the unchecked FSOC stamp out crypto innovation.
Stablecoin report is bullish. Implied they want to do a cbdc (aka govt stable) and threatened financial repression is good for crypto. Also want congress to act. Congress is barely capable of tying its shoes. Means q1 of next year problem which means window dressing year end pump
The report overlooks both the role played by state regulators who currently supervise many U.S. stablecoins through trust, SPDI, or MTL regimes, and whether coordinated federal/state action could address any perceived gaps.
For these reasons, I consider the Treasury report a botch job. It will be good news for the big banks, and good news for a small number of big stablecoin firms. But for the public as a whole, it's a lost opportunity.
We need to encourage payment system providers that are not ordinary banks, and don't with to become such banks, as doing so subjects existing providers to badly-needed competition, lowering consumer costs and encouraging ongoing innovation.
Today, Treasury joined colleagues from the President's Working Group (PWG) on Financial Markets, @FDICgov and @USOCC to issue a report on stablecoins. Read more: https://home.treasury.gov/...
But there are meaningful risks and questions raised around this — for example, concerns about settlement finality in stablecoin transactions built on public ledgers, and reliance on chains that pose operational or other risks. 8/22
The report shows a real openness to the operation of dollar stablecoins at global, even systemic levels of scale, yet built on public internet infrastructure. That's a breakthrough in at least the conceptual acceptance of public chains as global economic infrastructure. 7/22
Overall, this is probably the biggest policy/regulatory disconnect as we go forward — ensuring that financial apps, such as stablecoins, DeFi protocols, exchanges, custodial wallets, etc. can have activity based risk-adjusted regulation built on public chains. 13/22
I mean this: “To address risks to stablecoin users and guard against stablecoin runs, legislation should require stablecoin issuers to be insured depository institutions.” Translation: the Biden administration, for all its anti-Wall Street rhetoric, is catering to the big banks.
this stablecoin report is bad, i dont care what anyone says forcing USDT, USDC to be able to identify “unhosted wallets” amounts to implementing a KYC address whitelist regime This is bad for defi as we know it today, and even CEXes Good for censorship-resistant stables tho https…
On top of that, the PWG wants stablecoin issuers to register as banks. Meanwhile, #MichaelHsu at the OCC has halted all of the progress @BrianBrooksUS made with the OCC special purpose bank charter, which would provide qualifying fintechs to operate as national banks.