Squashing Tether

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Federal regulators requested more power from Congress to regulate stablecoins, a fast-growing type of cryptocurrency that they warn could result in bank runs and consumer abuse unless lawmakers act quickly, according to a report issued Monday by the Treasury Department.

The report, which was undertaken by the President’s Working Group on Financial Markets, called on Congress to pass a law that makes issuers of stablecoins subject to requirements like those of traditional banks and financial institutions. Such a change would require that those institutions hold adequate reserves to ensure they can meet the demands of customers to cash out quickly.

The call for congressional action comes at a pivotal moment, as cryptocurrencies are exploding in growth with limited federal oversight in place to regulate them.

Stablecoins, have not always proved as securely backed as companies claim, which the Treasury report warns could pose significant problems for customers, investors and the overall financial system.

Some regulatory powers already exist, the report said, including the ability of the Securities and Exchange Commission and other federal agencies to police certain stablecoin issuers.

But after months of studying the growing risks presented by stablecoins, the leaders of the President’s Working Group on Financial Markets said they had identified regulatory gaps that legislators must address, essentially throwing the issue to Congress.

Here is a link to the report:

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