Treasury Secretary Janet Yellen Summons Regulators to ‘Discuss Stablecoins’ on Monday
Treasury Secretary Janet Yellen announced her plans this week to convene the President’s Working Group (PWG) on Financial Markets in order to discuss the interagency work on stablecoins that will take place on July 19.
This discussion on stablecoins will also involve the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC).
“Bringing together regulators will enable us to assess the potential benefits of stablecoins while mitigating risks they could pose to users, markets, or the financial system,” Secretary Yellen said. “In light of the rapid growth in digital assets, it is important for the agencies to collaborate on the regulation of this sector and the development of any recommendations for new authorities.”
According to the official announcement, the working group will be examining the ongoing regulations of stablecoins, identifying risks associated with them, and developing recommendations for addressing those risks, which the PWG expects to issue in the coming months.
Stablecoins’ supply has risen dramatically since last year, now surpassing $110 billion in total, with Tether (USDT) accounting for the dominant 58.78% market share followed by USDC’s 23.5% and BUSD’s 10.25%.
In Q2 of 2021, stablecoins facilitated $1.7 trillion in transaction volume, up 1,090% year-over-year and 59% since Q1.
Interestingly, decentralized stablecoins are also gaining traction, which reached an all-time high of ~10% of the total stablecoin supply at the beginning of Q2, noted Ryan Watkins of Messari.
This week, Federal Reserve Chairman Jerome Powell noted the rapid rise in stablecoins and called for appropriate regulation.
“They are like money funds, they’re like bank deposits and they’re growing incredibly fast but without appropriate regulation,” Powell said before the Senate Banking Committee on Thursday. “And if we’re going to have something that looks just like a money market fund or a bank deposit or a narrow bank and it’s growing really fast, we really ought to have appropriate regulation. And today, we don’t.”