LONDON Reuters - Indexed stablecoins do not pose a systemic risk to the U.S. financial system and should not face a new set of rules, a major bitcoin lobby group told U.S. regulators on Monday as tighter oversight of the increasingly complex technology looms.
Stablecoins - other coins usually backed by reserves of dollars or money from gold to digital cryptocurrencies have ballooned during the COVID-19 pandemic.
As a result, the President's Working Group on Financial Markets - which comprises the top U.S. regulators including the Treasury and Federal Reserve - is focusing on them as part of wider efforts to curb crypto.
The group is widely expected to publish a report detailing the risks and opportunities for stablecoins in the coming months.
The Chamber members include Wall Street banks Goldman Sachs Inc Group and Citigroup Inc as well as crypto firms like Circle, which issues the second largest stablecoin USD Coin. The Hong Kong-incorporated tether, which issues the largest stablecoin, is not part of the group.
Proponents say stablecoins could revolutionise payments by avoiding volatility of bitcoin while offering the same advantages of speed and low-cost. But they are more widely used for crypto trading than payments, with their growing size capturing the attention of financial watchdogs.
Current regulation is patchy around the globe. The size and nature of reserves held by merchant banks is typically not subject to the same oversight as that for reserves held by stablecoin issuers.
The value of Tether has jumped from $15 billion to $69 billion a year ago, according to CoinMarketCap. USD Coin has also soared in the same period, nearing $33 billion from just $2.7 billion.
This month, in addition to global regulators, traditional investors would have to conform with the same safeguards as more traditional competitors in payments.
In the United States, federally-related stablecoins are subject to a patchwork of state-based rules as well as oversight from some state agencies.
In July, Treasury Secretary Janet Yellen told regulators that government must move quickly to establish a regulatory framework for stablecoins.
Opposing a new set of rules, the chamber also called for well-regulated U.S. stablecoin companies to have access to Federal Reserve payments infrastructure.