Treasury Secretary Janet Yellen will convene top U.S. financial market and bank regulators on July 19 to discuss rules for so-called stablecoins, a key part of the cryptocurrency market where government officials are increasingly fretting about a lack of oversight.
The meeting of the President's Working Group on Financial Markets will "discuss interagency work on stablecoins," the Treasury Department said in a statement Friday. In addition to the Treasury secretary, the working group is made up of the heads of the Federal Reserve, Securities and Exchange Commission and Commodity Futures Trading Commission, and this session will also include two bank regulators: the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp.
"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," Ms. Yellen said in the statement. "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."
The working group "will examine the current regulation of stablecoins, identify risks and develop recommendations for addressing those risks," and expects to "issue written recommendations in the coming months," the Treasury said.
Regulators are increasingly worried about this new kind of cryptocurrency, which has a fixed price and is backed by real-money reserves, because of risks it poses to investors and the financial system broadly. Lawmakers and officials from the Fed and the administration have expressed alarm both in public and private that some consumers won't actually be protected should one of the firms not have the backing they purport to have.
They also say the growing size of stablecoins has created a situation where huge amounts of U.S. dollar-equivalent coins are being exchanged without touching the U.S. banking system, potentially blinding regulators to illicit finance.
The market value of U.S.-dollar-backed stablecoins has grown rapidly in the past year and surpassed $100 billion in May. The largest, called Tether, has faced scrutiny from regulators for not always having the backing that it has claimed to have.