Morgan Stanley Says US Could Regulate Stablecoin Issuers Like Banks

A U.S. CBDC is needed to ensure the dollar remains the world’s dominant payment mechanism, the bank’s analyst said

AccessTimeIconApr 12, 2022 at 11:02 a.m. UTC
Updated May 11, 2023 at 4:09 p.m. UTC
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The U.S. Treasury Department and Congress are preparing regulation for stablecoin or crypto dollars issuers that could see them being regulated in a similar way to how the banks are regulated, Morgan Stanley (MS) said in a recent research report.

  • President Joe Biden recently signed an executive order relating to the future of digital assets, with a focus on investigating a central bank digital currency (CBDC).
  • The U.S. administration is acknowledging the competition from foreign CBDCs in China and the eurozone, and sees the need to act with the highest urgency “for the U.S. dollar to remain the favored and dominant payment mechanism,” Morgan Stanley analysts led by Sheena Shah wrote. The Biden administration sees the regulation of the crypto markets as a way to manage the impact on U.S. dollar banking dominance, the note said.
  • Implications for the crypto markets could be far reaching as about 60% of bitcoin (BTC) and ether (ETH) exchanges are trades against a stablecoin, and stablecoin lending has become an important part of centralized and decentralized finance (DeFi), the note added. DeFi is an umbrella term used for lending, trading and other financial activities carried out on a blockchain, without needing any third parties.
  • Morgan Stanley said there is still regulatory uncertainty about whether stablecoins are securities, derivatives or commodities, noting that they are not currently widely used for business and consumer transactions.
  • If the U.S. government is serious about introducing a retail CBDC, it could potentially change the business models of banks and payment companies, the report said, and could also lower fees, it added.
  • The Wall Street bank expects progress on new U.S. crypto regulation to be slow, particularly ahead of U.S. midterm elections in November.


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Will Canny is CoinDesk's finance reporter.

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