December 9, 2021

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Biden Administration Asks Congress To Regulate Stablecoins, Meaning Stablecoins Will Go Unregulated

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Here’s something you might not expect to hear from the Biden administration: Actually, stablecoins might be good.

Stablecoins could “support faster, more efficient, and more inclusive payments options,” said the President’s Working Group on Financial Markets…. “Moreover,” the report reads, “the transition to broader use of stablecoins as a means of payment could occur rapidly due to network effects or relationships between stablecoins and existing user bases or platforms.”

Oh no! Someone clearly put Gary Gensler in Peter Navarro’s closet! Oh, wait, there’s more:

Biden’s economic advisors said Congress must introduce regulatory oversight and formal market structure as soon as possible to both protect and inform investors, issuers and exchanges.

Specifically, the Biden team recommended Congress pass legislation that limits stablecoin issuance to insured banks, a move that would give regulators far greater jurisdiction over the industry.

Ah, we see: Stablecoins could revolutionize the financial markets, and in a good way, but they won’t, because that would require Congress to do something.

“I agree with many of the recommendations, including the need for Congressional legislation and prudential risk management, proposing that only insured depository institutions may issue a stablecoin is misguided and wrong,” [Wyoming Republican Sen. Cynthia Lummis] said in prepared remarks. “We should all be able to agree that startups should have the same chance as Wall Street institutions. As the report clearly states, though, Congress will have the final say.”

And, of course, not to decide is to decide, which in this case means deciding that this sort of thing is A-OK.

The cryptocurrency, called Squid, began trading early last week at a price of just one penny per token…. Then Squid went on a roller-coaster ride. In a 10-minute span later on Monday, the token’s value grew from $628.33 to $2,856.65, according to CoinMarketCap, a crypto data tracking website. Then, five minutes later, it traded at $0.0007….

The reasons behind Squid’s collapse, reported earlier by Gizmodo, weren’t clear. Neither were the identities of its creators. Its website appeared to have been taken offline. An email sent to its developers bounced back. Its social media channels appeared to have been shut down. Its Twitter account was not accepting direct messages or replies.

Yup, definitely don’t want to unduly impede those innovative startups, Cynthia.

Stablecoins are a compelling payment option, but they need to be regulated, Biden administration report says [CNBC]
A cryptocurrency inspired by ‘Squid Game’ crashes. The industry has questions. [NYT]

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