Treasury Sec. Yellen to begin discussing stablecoins with regulators
Yahoo Finance’s Brian Cheung joins the Yahoo Finance Live panel to discuss the latest with the Fed as Yellen, regulators begin to discuss stablecoins.
Video Transcript
ZACK GUZMAN: Welcome back to Yahoo Finance Live. You can see the Dow off by about 800 points in today's sell-off. Crypto not immune to that as well, as Bitcoin hovers near that key $30,000 level. And we've continually seen regulators stress concerns in the crypto space not necessarily around Bitcoin itself, but around stablecoins meant to track the US dollar. And today, Janet Yellen, along with Fed Chair Jerome Powell and the head of the SEC, all meeting to discuss some key regulations around stablecoins. And for more on that, I want to bring on Yahoo Finance's Fed reporter Brian Cheung, who has the details. Brian.
BRIAN CHEUNG: There will be a meeting today. It hasn't happened yet with Treasury Secretary Janet Yellen and a number of federal regulators around the issue of stablecoin regulation. The meeting will include the heads of the Federal Reserve, the SEC, the CFTC, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency. And the reason to bring together that alphabet soup of federal regulators is to try to bring a little bit more clarity into specifically the stablecoin coin space.
Again, stablecoins differentiate themselves from other cryptocurrency like Bitcoin in that they are backed by relatively safe assets like the US dollar. But there's some concern from regulators that, first of all, stablecoins might be a way to get around some of the anti-money laundering provisions, in addition to the lack of transparency into these stablecoins to see whether or not they truly represent themselves as safe as they are advertised.
Now we got a statement from Treasury Secretary Janet Yellen when they announced this meeting last Friday. She said, quote, "Bringing together regulators will enable us to assess the potential benefits of stablecoins while mitigating risks they could pose to users, markets, or the financial system. So again, they're acknowledging both the risks and also the benefits. So it's not like this is going to be a wholesale crackdown on the space.
But one other interesting wrinkle is whether or not the approach to regulating stablecoins could be changed by the Federal Reserve's approach to their own stablecoin, which would be some sort of Fed-issued digital dollar. But take a listen to what Fed Chairman Jerome Powell told Congress last Thursday with regards to how the Fed is thinking about a possible Fed coin.
JAY POWELL: The more direct route would be to appropriately regulate stablecoins, which we're not-- we don't do right now. And that's going to be a very important thing that we do, do. So in terms of congressional authorization, you know, there are different views on that. I've said publicly-- and I think this is right-- that we would want very broad support in society and in Congress. And ideally, that would take the form of authorizing legislation, as opposed to a very careful reading of ambiguous law to support this. It's a very, very important initiative. And I do think we should, ideally, get authorization.
BRIAN CHEUNG: So you can hear that there are a lot of moving parts to the Federal Reserve and also the broad federal regulatory agencies' approach to table coins because it ultimately will depend, in many ways, on whether or not the Fed does decide to issue its own stablecoin.
But as the Fed chairman was explaining in that clip that we just played, that's also going to involve buy-in from Congress because the Federal Reserve doesn't necessarily have the legal green light to necessarily issue one itself. The Fed chairman saying they might prefer something more codified through a specific law change. So definitely a space worth watching in the next few years because, obviously, it sounds like this is something in the developing space that could be playing out not just over the short term, guys.
