![]() This memorandum provides an overview of the report’s assertions on stablecoin risks, its recommendations, and their related implications for the stablecoin marketplace. Even in the absence of such legislation, though, the report makes clear that the federal regulatory agencies of the PWG, along with the FDIC and the OCC (collectively, the “agencies”), would continue using their regulatory, supervisory, and enforcement powers to address the risks relating to stablecoins, and the agencies also recommend that the Financial Stability Oversight Council (the “FSOC”) “consider steps available to it” to address such risks. It also calls for Congressional action in implementing legislation based on policy recommendations to address those risks. Helpfully, the report provides a primer on stablecoins and their use cases before addressing their perceived risks. Accompanying such growth, or perhaps in response thereto, is an increasing regulatory scrutiny of stablecoins and their issuers, as well as the cryptocurrency and blockchain spaces more generally. As noted, the market capitalization of stablecoins issued by the largest stablecoin issuers exceeded $127 billion as of October 2021, reflecting a nearly 500% increase over the last year. It was released at a time when stablecoins are experiencing rapid, substantial growth in use and distribution. The report focuses on stablecoins that are convertible for an underlying fiat currency, as opposed to a smaller subset of stablecoin arrangements that use other means to attempt to stabilize the price of the instrument ( i.e., “synthetic” or “algorithmic” stablecoins) or are convertible for other assets. On November 1, 2021, the President’s Working Group on Financial Markets (“PWG”), joined by the Federal Deposit Insurance Corporation (“FDIC”) and the Office of the Comptroller of the Currency (“OCC”), released a report on stablecoins. US STABLECOIN REGULATION: BRINGING STABLECOINS INTO THE REGULATORY FOLD ![]()
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