Popular blockchain startup Figure Technologies Inc. and its partners under the group name USDF Consortium reportedly attended a meeting with U.S. banking regulators about how to issue stablecoins that meet regulatory requirements.
People familiar with the development told Bloomberg today that some of the attendees of the meeting include some senior officials from the Federal Reserve, Office of the Comptroller of the Currency and Federal Deposit Insurance Corp.
“As the policy on stablecoin evolves, we believe the USDF Consortium is well-positioned to comply and continue to grow,” Ashley Harris, Figure’s general counsel, said in a statement.
Figure’s USDF Stablecoin Differs From USDT & USDC
Despite owning a stablecoin that differs from what is in vogue in the stablecoin market, Figure and its partners are still eager to avoid any issues with U.S. regulators.
Other stablecoins like USDT and USDC are issued by private organizations and are backed by reserves that can be redeemed for a U.S. dollar equivalent. This method has come under scrutiny in recent times, as many complained that the so-called reserves used by Tether and other stablecoin issuers are opaque and unregulated.
Based on this criticism, Figure opted for a different approach where its stablecoin named the USDForward will be issued by banks like New York Community Bancorp Inc and its partners, with customers expected to make a deposit before the coin’s equivalent will be allotted to them.
The bank will mint a digital marker that will be tied to the customers’ deposits, allowing them to use the markers to pay for transactions, which will have its details recorded on a public blockchain.
“[USDForward] is consistent with the recommendations of the President’s Working Group that stablecoin be minted exclusively by insured depository institutions.”
Stablecoins Regulation Proposal
USDF Consortium’s meeting with U.S. banking regulators comes after recommendations from the president’s Working Group on Financial Markets recommended that Congress should regulate stablecoin issuers like banks.
The committee noted that it was concerned about curtailing the risks that stablecoins would have on the existing financial system.
Circle CEO Support the Recommendations
The recommendations by the president’s Working Group have sparked mixed reactions from crypto and traditional financial enthusiasts. Jeremy Allaire, CEO of Circle, the popular stablecoin issuer declared his support for the recommendations, adding that the company is upgrading its stablecoin – the USDC – to align with the fundamentals of the future of banking, capital markets, and payments.
