Regulatory Regimes Prepare for Expansion of Stablecoin Use
Regulatory regimes are gearing up for the increasing use of stablecoins. The U.S. Federal Reserve has issued a letter to state member banks, outlining the need for proper procedures to handle liquidity and illicit finance risks associated with dollar tokens. The Fed has also introduced the “Novel Activities Supervision Program” to strengthen its oversight of all banking organizations involved in stablecoin activity.
The UK Treasury has also released an updated proposal for a regulatory regime for systemic stablecoins. Under this framework, the Bank of England and Financial Conduct Authority would jointly supervise stablecoin issuance and usage.
Key Points:
- The U.S. Federal Reserve is requiring state member banks to demonstrate proper procedures for dealing with liquidity and illicit finance risks related to stablecoins.
- The Fed has launched the “Novel Activities Supervision Program” to enhance its supervision of all banking organizations involved in stablecoin activity.
- The UK Treasury has outlined a regulatory regime for systemic stablecoins, with the Bank of England and Financial Conduct Authority taking joint responsibility for supervision.
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