A US banking regulator shared his stance on the stable coin regulation and supported the regulation idea proposed by Joe Biden’s administration.
Stablecoin is getting better attention among the government agencies because these stable price based assets are helping the crypto Investors to handle funds easily on the crypto platforms. More importantly, Decentralized Exchanges brought better use cases for Stablecoins for trading-related activities. The majority of the government agencies are under the hurdle to bring regulation for these stablecoin provider companies to ensure the safety of the stable coin holders.
On Friday, In speaking at the Georgetown Law School on his “Thoughts on the Architecture of Stablecoins“, the Acting Comptroller of the Currency, Michael Hsu, said that stablecoins issuer companies should be regulated under the legal strict standards more likely to the Banks because these companies and Stablecoins issuer companies are almost in the same category and operations based system.
Hsu asserted that these stablecoin companies should have to go through “insured depository institutions. He also rejected the proposal to bring special multiple regimes for stable coin companies, instead suggesting bringing control on the issuance of coins like Banks.
Hsu said that the category for stable coins companies under the banking category should be flexible because stablecoins companies are not investment-based companies, like Banks.
“Banking approach would be more effective. Some have expressed concerns, however, about undue burden and inefficiency. If a stable coin entity were tightly limited to just issuing stablecoins and holding reserves to meet redemptions.”
According to Hsu, precisely described policies and frameworks for stable coin companies bring better clarity and kick the risks away. So he insisted on making the rules much clearer so that rules can bring a better impact on these companies’ operations.
” stable coin issuing bank could be narrowly prescribed, a tailored set of bank regulatory and supervisory requirements could balance stability with efficiency.”
In recent weeks, a proposed suggestion also came to light among US officials where it was suggested to impose a rule on the stablecoin issuer company to restrict them to deposit the reserved funds in US dollars in banks and hold government securities and bonds.