The United States Securities and Exchange Commission (SEC) has reportedly achieved a significant measure of authority to implement bank regulations on the $131 billion stablecoins market.
According to a Bloomberg report, which cited unnamed sources familiar with the matter, the SEC will officially be recognized as having authority to regulate these crypto tokens in a much anticipated Treasury Department report, which will be published later this week.
Stablecoins are crypto tokens whose values are closely tied to other assets, like the U.S. dollar. Stablecoin issuers typically keep reserves that are equal to the number of tokens in circulation to ensure that investors can exchange the tokens for regular currency.
The report will allegedly urge Congress to approve of a decree that will see stablecoins being regulated in the same manner as bank deposits, as well as reaffirming the role of the Commodity Futures Trading Commission (CFTC) in overseeing stablecoins.
The anonymous sources revealed that the SEC’s chairman, Gary Gensler, has been pushing for changes “behind closed doors,” to increase the regulator’s authority over the stablecoins market.
Gensler’s efforts were geared toward ensuring that the government will take an active role in regulating stablecoins while waiting for long-term regulatory changes.
According to the sources, early versions of the report had urged Congress to pass a law that will create a new type of bank charter for stablecoin issuers.
However, Gensler had reportedly pushed to clarify the SEC’s powers to oversee transactions involving stablecoins in recent weeks.
Rising Concerns among Financial Regulators
Following a massive surge in the trading of stablecoins, the market has been receiving increased surveillance from financial regulators who are worried about the risks associated with these tokens due to their rapid growth.
The market cap of the top stablecoin, Tether (USDT) had surged from $21 billion to a whopping $70.65 billion in the past few months.
The stablecoin issuer, however, went under regulatory probe by the Department of Justice earlier in June for allegedly committing bank fraud.
Shortly after that saga, Tether was fined $42.5 million, along with Bitfinex, for violating regulatory requirements.
