Biden’s Stablecoins Task Force Wants to Pass Crypto-Buck to Congress

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On Monday of this week, the President’s Financial Markets Task Force (PWG) released its regulatory and legislative recommendations specific to stable coins. The PWG met in July after various banking officials and politicians said stablecoins pose a “systemic risk” to economies around the world, including the US economy.

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What are stablecoins?

Stablecoins are cryptocurrencies linked to physical assets not linked to the blockchain, such as fiat currencies, gold, commercial paper or government bonds. Supporting an established resource, such as the US dollar, at a 1: 1 ratio with a given stable coin is intended to mitigate the volatility typically associated with crypto. Stablecoins are primarily used as a crypto parking lot for profits after an asset divestiture. Stablecoins help preserve crypto gains – they can be used to earn interest while idling in an exchange wallet and provide liquidity for rapid deployment for other asset purchases.

After three months of navel observation, the PWG report did not provide any new information. Instead, he reiterated past comments that stablecoins have a lot of potential utility for consumers, but this utility needs to work in accordance with regulatory and legislative guidelines. This is because members of the task force said in their statement that they feared “destabilizing [stablecoin] races, disruptions in the payment system and the concentration of economic power. “

The report also states that stablecoins present other potential risks, including “investor protection, market integrity and illicit financing issues” – as if the resignation last month of two Federal Reserve governors no had not already increased these risks. They resigned due to possible ethics violations and conflicts of interest in securities trading while working for the federal government.

Politicians take final no-action

Either way, the PWG’s big recommendation was to throw the stable coin box on Pennsylvania Avenue all the way to the United States Capitol and let Congress find out. The PWG added the guidelines, “to adopt legislation to ensure that stable payment coins and stable payment coin agreements are subject to a federal framework on a consistent and comprehensive basis,” which essentially means dealing with issuers stable coins like banks.

However, if Congress is slow to act, the PWG made another non-recommendation in its press release, stating that it would urge the Financial Stability Supervisory Board (FSOC) to “review the measures available to it to do so. facing the risks described in this report. “You may recall that the FSOC was the committee formed by former President Obama in 2010 to help get through the 2008 financial crisis.

New boomerang approach to policymaking

The only problem with the PWG engaging FSCO is that the current PWG members are all also part of FSCO. They include Treasury Secretary Janet Yellen, Federal Reserve Chairman Jerome Powell, Securities and Exchange Commission Chairman Gary Gensler, and Commodity Futures Trading Commission Acting Chairman Rostin Behnam.

So even if the PWG and Congress are unable to resolve these issues, the PWG only needs to engage its 11 other bureaucratic friends at FSCO to finally get there – or not. For now, we are continuing our wait-and-see approach to regulating stablecoins in the United States.

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