TL; DR Breakdown
- The Presidential working group has submitted reports on regulating stablecoins to the Congress
- The report focuses on payments stablecoins
- PWG clears the air on the jurisdiction of digital assets
Over the last few years, countries across the globe have been looking for ways to monitor and regulate the crypto sector in their countries. This is due to the rampant malicious acts carried out in the industry. Like most regulators across the world, the United States SEC, through its boss, Gary Gensler, hinted that it might consider regulating stablecoins. With that still around the corner, the USA’s presidential working group (PWG) gave its report on the financial market. The report talked chiefly about recommendations of the policy on regulating stablecoins.
Focus on regulating stablecoins used for payments
The document focused mainly on the risks that payment stablecoins posed to users and the general financial stability. Stablecoins are usually digital assets pegged to fiat currencies, in which case the USDT is a popular type. The key takeaway from the PWG report was that even though stablecoins were largely used to facilitate crypto transactions, it could be open to broader adoption, necessitating the Congress regulating stablecoins.
The PWG comprises the head of the majority of the regulatory body across the United States, such as the United States SEC and the Office of the Comptroller of the Currency. With the body boasting of such elite memberships, it was tasked to develop a reputable policy regarding regulating stablecoins.
A previous anonymous post that went viral claimed that the body would give the SEC full autonomy to develop guidelines on regulating stablecoins. This news was received across the crypto space with disappointment due to the SEC’s previous stance on digital assets.
Stablecoins might fall under SEC or CFTC jurisdiction
While various crypto participants were expecting the PWG report, other regulators started claiming the crypto sector. According to former SEC lawyer Marc Powers, the CFTC can regulate Bitcoin, which is seen as a commodity. Furthermore, Rostin Behnam, the present chairman of the CFTC, mentioned last week that the body was supposed to be the lead regulator regarding crypto assets. In his assessment, he claims that the majority of the assets in the sector were commodities.
As expected, the newly released policy on regulating stablecoins report did not come from a single regulator. In the report’s conclusion, the PWG claims that regulating stablecoins could fall under the jurisdiction of the United States SEC or the CFTC because they consider it a commodity, derivative, and security. With the PWG waiting on Congress regarding a regulation, they have opened up how to look at the risks before a rule is passed.