The U.S. Securities and Exchange Commission (SEC) proposes legislation between agencies and stablecoin seized an important opportunity to control the market.
Citing sources familiar with the matter, news outlet Bloomberg said the SEC’s “significant authority” over tokens like tether will be revealed in a report expected this week.
A source reported that authorities will ask Congress to pass a law stating that coins should be regulated. According to one of the sources, who has not been named because the talks are confidential, the report will request Congress to pass legislation stating that coins should be regulated similarly to bank deposits. The report is expected to highlight the powers of the SEC.
Comparing stablecoins to poker chips in casinos, SEC chairman Gary Gensler has been urging lawmakers for some time to give the SEC more power to regulate the industry. There may be an upside for the SEC to win this war. Despite its tough stance on these digital assets, the range of stablecoin issuers could expand under the SEC’s oversight, according to Jaret Seiberg, a DC-based financial services policy analyst at Cowen.
Stablecoins are intended to be less volatile than cryptocurrencies as they are pegged to fiat currencies such as the US dollar. This means that the companies that support them often commit to holding collateral to ensure that investors can exchange the tokens for fiat money.
But Tether, one of the largest stablecoin issuers with a market cap of $70 billion, is at the center of debate as to whether it’s really backed by real dollar reserves. Recently, the company was fined $41 million by the CFTC for misleading statements that its stablecoin supports one-to-one US dollars.