The President’s Working Group for Financial Markets, a presidential advisory group, plans to issue recommendations about stablecoin regulations within the next few months, it announced Monday.
According to a readout published by the U.S. Treasury Department, the highly anticipated meeting examined stablecoin growth, use cases and possible threats. The meeting was first announced on Friday, capping off a recent rise in attention on stablecoins and their role in the cryptocurrency economy.
“The group also heard a presentation from Treasury staff on the preparation of a report on stablecoins, which would discuss their potential benefits and risks, the current U.S. regulatory framework, and the development of recommendations for addressing any regulatory gaps,” the readout said.
Federal Deposit Insurance Corp. Chairwoman Jelena McWilliams, Acting Comptroller of the Currency Michael Hsu, Treasury Under Secretary for Domestic Finance J. Nellie Liang and Federal Reserve Vice Chairman for Supervision Randal Quarles joined Treasury Secretary Janet Yellen, Federal Reserve Chairman Jerome Powell, Securities and Exchange Commission Chairman Gary Gensler and Acting Commodities Futures Trading Commission chief Rostin Behnam during the meeting.
The meeting came just days after Federal Reserve attorney Jeffery Zhang (writing in a personal capacity and not for the Fed) and Yale University economist Gary Gorton published a paper saying stablecoins could pose a systemic risk to the financial system.
The paper likened stablecoins to the wildcat banks of the 1800s, pointing to a lack of insurance, the risk of bank runs and the chances of a stablecoin losing its peg when a user tries to redeem or spend it.
It’s unclear when specifically the Treasury Department intends to publish its recommendations, or whether it will focus more on congressional action or agency rulemaking.
“The Secretary underscored the need to act quickly to ensure there is an appropriate U.S. regulatory framework in place,” Monday’s readout said.