Federal Reserve Governor Urges for Stablecoin Regulations

In a recent At A Very Stable Conference held in San Francisco, Federal Reserve Governor Christopher Waller stated that stablecoins are an important innovation for the crypto ecosystem with the potential to improve retail and cross-border payments.

Waller defines stablecoins as a type of digital asset designed to maintain a stable value relative to a national currency and backed at least one-to-one with safe and liquid assets. Specifically, a pool of assets is held in reserve so that stablecoins can be redeemed for traditional currency in a timely fashion.

Currently, stablecoins are digital currencies that possess steady value due to them being linked to fiat currencies, most commonly the U.S. dollar or Treasury bills. So far, two of the largest stablecoins by market cap, USDT and USDC, are both pegged to the U.S. dollar.

Waller stated that the stablecoin market requires a regulatory framework that encompasses stablecoin risks “directly, fully, and narrowly” before financial institutions will be able to issue them,

“This framework should allow both non-banks and banks to issue regulated stablecoins and should consider the effects of regulation on the payments landscape,” Waller added.

Support for Stablecoin Framework Continues to Garner Steam

Waller’s comments pertaining to the creation of a stablecoin framework is the latest in the clamor of various pro-crypto legislators to have a better U.S. crypto environment. 

Last February, Chairman Jerome Powell declared his full support for the creation of a stablecoin framework in a meeting with the House Financial Services Committee. Powell’s stand was in line with the Federal Reserve’s commitment to developing stablecoins and Central Bank Digital Currencies in the U.S.

Moreover, some Democratic and Republican lawmakers have shown their support for stablecoin regulation. Rep. Maxine Waters, a member of the House Financial Services Committee and a Democrat, introduced a proposal for the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), and the Federal Reserve to have a joint stablecoin overseeing process.

Meanwhile, French Hill, a Republican Chair of the House Financial Services Committee, submitted a draft bill for stablecoin regulation earlier this month. Hill’s bill, which was co-sponsored by Rep. Bryan Steil, grants stablecoin oversight to the OCC instead of the Federal Reserve which was proposed by Rep. Waters.

With such initiatives from both sides of the political parties, it appears that the Trump Administration has found some like-minded allies who aspire to create a cryptocurrency-friendly U.S. market. Recently, the White House has nominated Jonathan Gould and Jonathan McKernan to man the helm of the OCC and the Consumer Financial Protection Bureau (CFPB), respectively.

Each step towards cryptocurrency regulation means players are that much closer to having a secure environment each time they use their digital assets in various ways like playing in online crypto casinos.