Regulation in sight for stablecoins – Stablecoins have become a hot topic within the cryptosphere, almost as much as the energy consumption of Bitcoin (BTC). The leaders of the sector, Tether and Circle, regularly shine for their lack of transparency on their reserves. Indeed, it was only after several years of existence that we finally learned that Tether’s reserves consist mainly of short-term debt securities. Only 3% of the reserves backing the USDT to the dollar are made up of cash. This state of affairs worries the Boston Federal Reserve, which believes that issuers of stablecoins could represent a risk for the debt market in the United States.
A summit meeting for US regulators
Janet Yellen, Secretary of the US Treasury, announced an imminent meeting of the President’s Working Group on Financial Markets (PWG). L ‘Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) will also be invited at the meeting scheduled for July 19.
At its previous meeting, in December 2020, the PWG had already worked on the subject of stablecoins. The first conclusion of the PWG was to recall that the United States promote innovation, as long as it remains responsible. And in order to be considered as such, innovation must respect the country’s regulatory environment. However, the working group had underlined the potential of stablecoins to improveefficiency of the current financial system.
In addition, stablecoins would be vectors of better competition between companies. On the other hand, they would also allow a better financial inclusiveness for individuals. As always, the PWG had also highlighted the risks associated with money laundering and terrorist financing.
Regarding the July 19 meeting, Yellen said:
“Bringing regulators together will allow us to assess the potential benefits of stablecoins, while mitigating any risks they may pose to users, markets or the financial system. With the rapid growth of digital assets, it is important that agencies work together to regulate this industry and develop possible recommendations for new authorities. “
The Securities Clarity Act, for a better definition of digital assets in the United States
On July 15, US parliamentarians tabled a new bill relating to digital assets. The text, supported by both Republicans and Democrats, aims to change the definition of ” investment contract “. This term used for over 75 years is the base of all the classification of digital assetsin the USA. When an asset is considered as an investment contract, it obtains the famous status of security (financial title), under the terms of Howey Test. It is in particular this definition which is the source of theconflict between Ripple and the SEC.
The bill therefore intends to provide a clear definition of investment contracts, promoting innovation:
“Regulators have taken an unreasonable approach to how federal securities laws should be applied to transactions involving the sale of blockchain-based tokens, and this lack of clarity is hurting American innovation. Between law enforcement and changing legal decisions regarding the classification of these assets, regulatory uncertainty has hampered the growth of blockchain technology, prompting many companies to transfer their technology overseas. “
Tom Emmer, Member of the US Parliamentarian
The establishment of a predictable legal environment is an essential condition for the development of a given sector. Providing certainty to investors and entrepreneurs alike is a tremendous driver of growth. For example, the French regulatory environment has for a long time been changeable and uncertain, which severely affected the attractiveness of France and the competitiveness of our companies. Nevertheless, the government is working to rectify the situation, with initiatives such as French Tech.
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