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U.S. Treasury Secretary Yellen encouraged authorities to implement stablecoin regulations

 (Photo: AFP)

Treasury Secretary Janet Yellen warned regulators that the United States has to move swiftly to develop a regulatory framework for stablecoins, a fast-growing class of digital currencies.

The remarks were made during a meeting of the President’s Working Group on Financial Markets on Monday. According to Reuters, the committee addressed the fast rise of stablecoins, indicating intentions to offer regulatory proposals in the coming months.

Leading financial regulators demonstrates how rapidly authorities are trying to ensure their regulations can keep up with rapid technological advances across digital currencies. Regulators debated their potential uses as well as the hazards to end-users and the financial system.

In a recent statement on stablecoins, Federal Reserve Chair Jerome Powell stressed the importance of establishing a solid legal framework for stable tokens.

If they’re going to be a big part of the payments world, then we need an adequate regulatory structure, which, frankly, we don’t have.

Regulators are becoming worried about the transparency of stablecoin trade, the reserves supporting them, and the extent to which market players rely on them to facilitate trading in decentralized finance.

Yellen cautioned in February that the exploitation of crypto assets, combined with cyber-attacks prompted by the global epidemic, was becoming a significant concern. She acknowledged the potential of these new technologies at the time, but also cautioned against her vision of reality, noting that “cryptocurrencies have been used to launder the profits of online drug traffickers, they have been a tool to finance terrorism.”

Related: World Bank dodge El Salvador Bitcoin adoption plan

Jeremy Allaire, CEO of USD Coin issuer Circle Internet Financial Inc., believes the meeting of the president’s working group is beneficial to stablecoins and promotes the development of clear rules.

Tether Ltd., the tether stablecoin issuer, stated that it is looking forward to working with officials to support transparency and compliance.

This year has seen massive growth in stablecoins as demand for decentralized financing has increased. According to CoinGecko, Circle’s USDC has been the greatest performer this year, with a 577 percent rise in circulating supply to record levels of 26.4 billion. As more cryptocurrency firms, such as Coinbase and Circle, go public or plan to go public, the sector now definitely needs greater regulation on stablecoins.

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