US Federal Reserve (Fed) Governor has warned about the potential risks that stablecoin may pose to financial stability and urged for strong oversight, as the industry awaits the final text of the highly anticipated crypto market structure bill.
Fed Governor Calls For Stablecoin ClarityDuring a Federalist Society event, Barr listed main use cases for tokens pegged to the US dollar, including facilitating crypto trading and as a store of value in some foreign jurisdictions. He also highlighted that they can be used to offer reduced remittance costs, expedite trade finance processing, and assist firms in managing their treasury functions.
Key issues include regulation of reserve assets, the potential for regulatory arbitrage, the scope of permissible activities for stablecoin issuers beyond issuance, appropriate capital and liquidity requirements, anti-money-laundering controls, and consumer protection requirements.
Final Text On Yield Compromise DelayedA source familiar with the matter stated that the delay reflects concerns that releasing the text ahead of a markup, now expected in the back half of the month, could give opponents an opening to slow the bill’s progress.
Notably, the two parties have been fighting over the potential prohibition of yield and rewards on stablecoin balances, stalling the crypto bill for over two months. Last week, the crypto industry got its first look at the latest version of the CLARITY Act, set to address the long-standing dispute.
The text aimed to limit workarounds and prohibit any activity “economically or functionally equivalent” to interest, addressing concerns from the banking industry side, but facing renewed backlash from crypto players like Coinbase.
According to the Wednesday report, the update follows ongoing talks between crypto and banking groups due to dissatisfaction with the earlier draft agreed upon by Tillis, Senator Angela Alsobrooks, and the White House.
