By
Bena Ilyas
May 3rd, 2024
Waters said a deal with the feds, to create some oversight in the US stablecoin market, has been worked out.
Lawmakers in the United States are reportedly working on stablecoin regulations and are close to reaching a deal. In an interview with Politico, Rep. Maxine Waters (D-Calif.) confirmed progress on the deal after several months of efforts with the head of the House Financial Services Committee Patrick McHenry.
“We’re working on stablecoin; we’re getting very close. We’re very, very close – very close,” said she.
Stablecoin Deal to Apply Federal Reserve Control
While several countries have been working hard at developing stablecoins, the US has taken a back seat. However, Waters’ comments seem to be changing the landscape, as crypto enthusiasts will now be expecting some deal on the use of stablecoins. For now, there is no indication about the requirements and whether or not the rules might stifle the stablecoin market in any way.
Part of the discussion on US stablecoins pertains to the Federal Reserve. The idea is for the US apex bank to apply market oversight, dictating availability and issuance rules. Waters agrees with this position, saying:
“That’s what’s important to me: Our central bank should have the power of oversight, and should have the ability to be at the head of this.”
The Rep has been in negotiations with McHenry for more than 20 months and has now said that lawmakers have “worked something out with the feds, and I think it’s OK”.
Stakeholders Agree US Needs Stablecoin Regulation
Government stakeholders generally agree that the stablecoin market requires regulation. During a recent hearing, the US Secretary of the Treasury Janet Yellen told Congress to quickly fix regulatory inadequacies in the cryptocurrency market to protect investors and shield the financial market from potential risks. Yellen, who heads the Financial Stability Oversight Council, noted in a testimony released before the hearing that crypto regulation is critical.
She said the Council is aware of related risks from digital assets, including stablecoins, potential vulnerabilities caused by volatility in crypto, and the increase in the number of platforms that are not operating within the limits of regulatory compliance.
“Applicable rules and regulations should be enforced, and Congress should pass legislation to provide for the regulation of stablecoins and of the spot market for crypto-assets that are not securities,” Yellen wrote.
Jeremy Allaire, the CEO of Circle, has expressed optimism at the chance of stablecoin law. Speaking to CNBC at the World Economic Forum’s meeting in Davos, Switzerland, Allaire said there is a “very good chance” of stablecoin regulation in 2024. According to him, there are already “digital dollars” issued in other countries, with their governments getting ahead of regulating dollar stablecoins before the US.
Perhaps adding to the need for regulation of dollar stablecoins is a recent report from the United Nations (UN) on criminal activity. The UN has said that Tether’s USDT is now the preferred asset for money laundering and related crimes in Asia. In a report from the UN’s Office of Drug and Crime Unit, criminals are also using USDT for pig butchering, a type of scam where people are convinced to make increasing contributions to a fake relationship or investment using crypto.