The US Securities and Exchange Commission (SEC) will receive the authority to regulate stable coins writes Bloomberg.
The PWG formed to discuss stable coins included representatives of the Federal Deposit Insurance Corporation, the Federal Reserve System, the SEC, the CFTC, the Treasury Department, and the Office of the Comptroller of the Currency.
SEC won a debate among US agencies to propose legislation and oversee the $131 billion stable coin market.
“The Treasury Department and other agencies will specify in a highly-anticipated report — expected to be published this week — that the SEC has significant authority over tokens like Tether, said people familiar with the matter. The report will also urge Congress to pass legislation specifying coins should be regulated similarly to bank deposits, one of the people said, asking not to be named because discussions are private.”
The approval of the PWG recommendations will strengthen the SEC’s ability to enforce and develop rules in the cryptocurrency market.
Sources said that the head of the department, Gary Gensler, insisted on increasing his powers. This will be bad news for the crypto industry, as most participants believe the SEC is upsetting the balance between supporting innovation and protecting consumers.
In September, Gensler called stable coins “poker chips”, He also warned that tokens can have securities attributes and therefore must be regulated by the SEC and CFTC.
Recently a group of US senators called on Facebook CEO Mark Zuckerberg to immediately end the Novi digital wallet pilot project and commit to not bringing Diem stable coin to the market. Prior to that, the Fed called the stable coin Tether (USDT) a challenge for financial stability.