Washington policymakers are alarmed at the rapidly expanding cryptocurrency market which exceeded a record USD 2 trillion in April 2021. It is unclear which financial regulations apply to these relatively new products.
US financial regulators are working to understand the risks and opportunities posed by cryptocurrencies to the traditional US financial system and plan to issue a number of reports on the subject in coming months, they have said. In a sign those efforts are gathering pace, Treasury officials this week met with financial industry executives to discuss potential stablecoin regulation.
Officials asked whether stablecoins would require direct oversight if they become extremely popular. They also discussed how regulators should try to mitigate the risks of too many people trying to cash in their stablecoins at the same time, and whether major stablecoins should be backed by traditional assets.
Another subject was if stablecoins should be structured, how they could be used, whether the current regulatory framework is sufficient, and other safety and soundness issues, one of the people said.
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