On March 9, 2023, Todayq News reported that the head of the CFTC stated that most stablecoins should be classified as commodities, while the SEC views certain cryptocurrencies as securities, causing regulatory uncertainty. This situation may impact user trust. Proposed bills aim to address the issue, but as of July 25, 2023, there is no final resolution.
In a recent interview with CNBC, Timothy Massad, the former chairman of the United States Commodity Futures Trading Commission (CFTC), emphasized the importance of the government’s focus on the stablecoin ecosystem. Massad described stablecoins as a bridge between the crypto world and the real world, stressing that they should not be dismissed as a temporary trend.
Addressing the concerns of regulators, Massad expressed his sympathy, understanding that some might be unsure of the value stablecoins bring to the real world. However, he urged patience, stating that discovering their true potential might take time.
Having been a vocal advocate for crypto regulation and greater collaboration between the CFTC and the U.S. Securities and Exchange Commission (SEC) regarding digital assets, Massad’s views align with a recent report by the U.S. Government Accountability Office (GAO) calling for interagency cooperation on crypto regulations.
One of the key advantages Massad highlighted about stablecoins is their potential to revolutionize payment systems in the U.S., creating faster and more efficient mechanisms. He even suggested that if the U.S. were to develop its stablecoin, it could inspire other countries to follow suit.
Apart from the U.S., countries like Australia and Japan recognize the importance of stablecoins for cross-border payments. On March 15, 2023, National Australia Bank (NAB) executed the world’s first cross-border stablecoin transfer on Ethereum, significantly reducing transaction time. NAB plans to support digital asset transactions for clients by year-end. Meanwhile, Japan introduced a bill on June 3rd, 2023, regulating stablecoins as digital money linked to the Yen, limited to registered banks and financial entities. Existing algorithmic or asset-backed stablecoins are not covered.
Massad emphasizes the importance of regulating stablecoins to address associated risks while acknowledging their potential benefits for innovation in the financial industry. He criticizes the U.S. for delaying the creation of a central bank digital currency (CBDC), highlighting the transformative potential of digital currencies. With proposed bills impacting stablecoin issuance and usage, there’s a pressing need for thoughtful and effective regulation in the crypto industry.