Janet Yellen, U.S. Treasury Secretary, at a hearing of the Senate Banking, Housing and Urban Affairs Committee in Washington, D.C., U.S. on Tuesday, September 28, 2021.
According to the long-awaited report by the Biden administration, stablecoins, which are a popular digital asset that is pegged to traditional currencies could change the way Americans pay for everything, from cell phones and gasoline to haircuts and cups coffee.
Stablecoins can be regulated to "support faster, better efficient and more inclusive payment options," stated the President's Working Group on Financial Markets. This group includes many top economic advisors to President Joe Biden.
"Moreover," the report states, "The transition to a broader use stablecoins could happen quickly due to network effects or relationships among stablecoins with existing user bases or platforms."
Biden's economic advisers stated that Congress should establish regulatory oversight and a formal market structure as soon possible to protect and inform investors and issuers.
The Biden team suggested that Congress pass legislation to limit stablecoin issuance by insured banks. This would give regulators greater control over the sector.
CNBC spoke with senior administration officials who said that while their report is focused on risks, the top regulators in the country believe that stablecoins are a compelling option for digital payments and that lawmakers need to be more vigilant.
The $130 billion stablecoin markets are valued more than their volatile crypto counterparts due to their stable valuation and connection to national currencies. They are a reliable source of liquidity for cryptocurrency markets all over the world because of their stability. They can be used by investors and traders to purchase and sell assets, or to store wealth.
Stablecoins can be seen as a store of value and a medium for exchange, much like traditional fiat currencies. This distinguishes them from crypto securities such as bitcoin, which investors often consider a source for capital appreciation and potential market returns.
Stablecoins, like other digital assets, need to be closely monitored to ensure they don't finance criminal activity, Gary Gensler, Chairman of the Securities and Exchange Commission, stated in a press release, also released Monday. Gensler is part of the President's Working Group on Financial Markets.
