Stablecoins pose no financial risk

The lobby group says regulators should not treat stablecoins as investment products

A US-based cryptocurrency lobby group has urged US regulators not to subject asset-backed stablecoins to new rules, report Reuters on Monday.

The Chamber of Digital Commerce, a group that includes Goldman Sachs, Citigroup Inc. and Circle does not want stablecoins to be subject to new, stricter rules as envisioned by the President’s working group on financial markets.

The Chamber has reportedly sent a letter to the president’s regulatory group, which includes the U.S. Treasury and Federal Reserve, urging that stablecoins backed by the dollar pose no risk to the country’s financial system and that subjecting them to new rules would be the wrong regulatory approach for the burgeoning sector.

According to the lobby group, regulators should not treat stablecoins such as USD Coin (USDC) as investment products. Instead of a “separate” Regulating the sector, the government should work towards aligning supervision with broader measures that apply to other digital means of payment.

While the US regulatory group is working to implement some of Treasury Secretary Janet Yellen’s recommendations, the Chamber of Digital Commerce says the sector does not pose systemic risks.

The Board has also asked regulators to work closely with the “well regulated” Stablecoin issuers in the U.S. work together to promote the technology. They also advocate that these companies gain access to the Federal Reserve’s payment infrastructure, according to the letter cited by Reuters.

As the growth of the stablecoin sector has increased over the past two years due to the global financial crisis, various governments have made proposals to prevent further proliferation. At the heart of these measures is the need to protect consumers from potential financial harm, in particular from risks associated with speculative trading.

Earlier this month, the G20 called on governments to step up oversight of stablecoins, with a new “global stablecoin” before its admission must undergo all legal and regulatory examinations.

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