One of the agencies overseeing the US banking industry has set itself the goal of regulating digital currencies. The Federal Deposit Insurance Corporation (FDIC) is working with the Federal Reserve and other watchdogs on how to better monitor the industry, one of its proposals being that all stablecoins must prove to regulators that they are backed. at 1: 1 by very liquid assets.
The FDIC provides deposit insurance to depositors of US banks and is one of the agencies that oversee the banking industry. It insures more than 4,500 establishments in the United States.
According to its chairman, the FDIC is seeking to add its name to the list of regulators who wish to oversee the digital currency industry. Speaking at the Money 20/20 conference, President Jelena McWilliams said she was in talks with the Fed and the Office of the Comptroller of the Currency (OCC) on what she described as “the crypto sprint “. Through this process, the three coordinate policies when banks are allowed to engage in digital currency activities.
She commented, “My goal is to provide clear advice to the public on how our existing rules and policies apply to crypto assets, what types of activities are allowed for banks and what prudential expectations we have for them. the banks that get involved. such activities.
The three agencies plan to issue a series of policy statements in the coming months, according to McWilliams.
Stablecoins are currently the main area of interest for regulators and the FDIC official has looked into them as well. McWilliams, who was appointed to the FDIC in 2018 by former President Donald Trump, acknowledged that stablecoins offer several advantages.
However, they also come with a set of risks. “… Especially if one or more becomes a dominant form of payment in the United States or globally. This could result in the migration of substantial sums of money out of insured banks with important ramifications for credit creation, financial stability and bank funding, ”McWilliams told attendees.
If the United States is to realize the benefits of stablecoins, it must be subject to proper government oversight. Above all, this oversight should be based on the fact that these stablecoins are really backed 1: 1 by highly liquid assets, she said.
If stablecoin issuers claim to have reserves to back up their coins, they should allow regulators access to those records to verify reserves, she believes.
In addition to reservations, the government must ensure that stablecoins have operational resilience and that adequate money laundering controls are in place.
“Establishing clear regulatory expectations will be essential to give this market an opportunity to grow and mature responsibly,” she concluded.
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