Treasury Secretary Janet Yellen renewed a call for Congress to create a regulatory framework for stablecoins last week, making that recommendation during a hearing of the Financial Stability Oversight Council before the House Financial Services Committee.
“FSOC has recommended to Congress that stablecoins require a regulatory framework,” Yellen said Feb. 6, referencing a report the council made two years ago.
The secretary acknowledged that stablecoins have not become widespread enough to pose a risk to the U.S. financial system. But should a stablecoin become widely used for payments, “you have the classic run risk that's associated with that,” she said, referencing a bank run on assets.
Yellen noted during her testimony that “there is no appropriate regulatory framework” provided by Congress. She added that FSOC has “tried to work on a bipartisan basis with the committee to see legislation enacted.”
Stablecoins may have already adversely affected the U.S. system, Yellen said. She tied digital assets to the broader banking meltdown last year.
“Digital assets did play some role in the banking problems we had last March, particularly with respect to Signature Bank and to Silvergate,” Yellen said.
Consumers may also face “some risks” from digital assets without regulation, Yellen said, adding that FSOC had not made any recommendations concerning that question. Yellen said government agencies such as the Consumer Financial Protection Bureau and the Securities and Exchange Commission had the regulatory authority to protect consumers.
