According to reports, the Biden administration is considering a new legal framework that would place stablecoin issuers in the same category of banks. This raises questions about the future regulation of crypto in the country.
According to people familiar with the matter The Wall Street Journal reported Friday by The Wall Street Journal that the administration wants to convince Congress to create a special-purpose charter for stablecoin issuers as well as other companies falling within the same category. It’s unclear how the legislation will look but it is expected to be specific to these business models.
In recent months, policymakers have raised concerns about stablecoins because they believe that these dollar-pegged assets don’t adequately regulate. Federal Reserve Chairman Jerome Powell stated earlier this week that stablecoins such as Tether (USDT), and USDC Coin(USDC) should all be regulated in the same way money market funds, like bank deposits. He maintained that there was no blanket ban on Bitcoin or any other digital assets.
Cointelegraph reported that in July, Yale University and the Fed jointly researched stablecoin regulation. The paper was 49 pages long.
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According to market capitalization statistics, stablecoins have grown to $128 billion. Although Tether is responsible for more than half of the market, competitors like USDC (BUSD), and Binance USD(BUSD) have made substantial progress this year. These markets have seen a rise in liquidity, which has brought attention to concerns about the reserve status and liquidity of stablecoin issuers.
Tether Holdings Ltd. reached a settlement with the Office of the New York attorney General and agreed to publish periodic reports that proved its currency reserves. The company revealed its complete reserve breakdown in May this year.