US President’s Working Group urges bank-like regulation for stablecoins
On November 1, 2021, the United States President’s Working Group on Financial Markets (PWG), joined by the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC), released its “Report on Stablecoins” (report). Citing the significant financial risks associated with the use of stablecoins, the report calls for Congress to enact sweeping legislation that would prevent anyone except insured depository institutions from issuing stablecoins and would regulate custodial wallet providers and other parties that perform critical activities of the stablecoin arrangement. If Congress does not promptly act, the report urges the Financial Stability Oversight Council (FSOC) to step in to address certain risks including designation of certain activities as, or as likely to become, systemically important payment, clearing and settlement activities. There have been mixed reactions to the report across the industry.