Biden Administration Seeking to Impose Banking Regulations on Stablecoin Issuers

The Biden administration is prepared to issue a report on stablecoins by the end of the month and is looking to regulate stablecoin issuers as banks.

The President’s Working Group on Financial Markets is expected to recommend that Congress establish a special-purpose charter allowing new crypto banks to manage stablecoins as deposits, reported the Wall Street Journal, citing a senior official involved with the report.

A group led by the Treasury Department further plans to recommend to the Financial Stability Oversight Council whether stablecoin activities should be designated as systemically important, the report added.

Examining whether stablecoins pose a systemic threat would be another approach to impose bank-like rules on stablecoins.

“Circle has already been working toward becoming a full-reserve national commercial bank,” said Dante Disparte, chief strategy officer and head of global policy for Circle, the issuer of the stablecoin USDC. The CSO sees the Treasury’s intent as “encouraging” and said they intend to work with regulators on appropriate crypto policies.

A few cryptocurrency firms, including Anchorage and Protego Trust Bank, have already won conditional bank charters from the Office of the Comptroller of the Currency (OCC).

However, under the former Acting Comptroller Brian Brooks, OCC made strides regarding crypto by giving national banks permission to offer crypto custody services, work with crypto custodians, and conduct payment using stablecoins.

Recently, Acting Comptroller Michael Hsu warned that crypto could threaten the financial system.

White House Calls A Meeting On Crypto’s Illicit Use

This week, the White House also said that top US national security advisers would be meeting with officials from 30 countries this month to work on plans to combat the growing threat of ransomware and other cyber crime.

An online session will also be hosted by the White House National Security Council aimed at “improving law enforcement collaboration” on issues like “the illicit use of cryptocurrency,” says the statement by President Joe Biden.

One White House official told the media that they are particularly eager to address “the misuse of virtual currency to launder ransom payments” and intend to “investigate and prosecute ransomware criminals,” many of whom are anonymous and attack institutions in other countries.

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