US Treasury Open to Nonbanks Issuing Stablecoins, Official Says

Though regulators called for issuers to be regulated as banks last year, Nellie Liang argues the category is wider than it might seem.

AccessTimeIconJul 18, 2022 at 6:56 p.m. UTC
Updated May 11, 2023 at 3:42 p.m. UTC
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As Congress considers a path for nonbanks to be allowed to issue stablecoins, Nellie Liang, the U.S. Treasury Department’s undersecretary for domestic finance, says that’s fine with the agencies that once recommended issuers be regulated as banks.

The President’s Working Group on Financial Markets, which recommended last year that stablecoins belong inside the regulated banking industry, didn’t mean to be overly rigid about how crypto firms might hit that mark, Liang said Monday at a Financial Services Forum event in Washington.

“There’s some flexibility under that framework,” she told reporters after speaking at the forum. “It’s meant to be open. It was not meant to limit to current banks.”

While the Treasury and the regulators in the working group want all stablecoin issuers to be regulated for safety and soundness, just like regular banks are, she said they shouldn’t have to have depository insurance and could be subsidiaries or affiliates of bank holding companies.

“What we wanted to do was bring it into the banking system,” she said. “Banking system – not necessarily deposit insurance.”

Issuers of the tokens, which designed for stability by being tied to assets such as the dollar, can’t be overseen only for the quality of their reserves, Liang said; they need a new regulatory structure from Congress.

Negotiations in Congress, which Treasury has been involved in, are still in the early stages, though a potential bill in the House Financial Services Committee has leaned toward setting up rules for both banks and nonbanks, according to people familiar with the talks.

“These are more than money market funds,” Liang said of stablecoin issuers, and so they need novel regulations that deal with them as payments companies, too.

Earlier, Liang told the forum's audience that digital assets have the "potential to really fundamentally reform payments."


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Jesse Hamilton

Jesse Hamilton is CoinDesk's deputy managing editor for global policy and regulation. He doesn't hold any crypto.

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