Federal Reserve Governor Christopher Waller believes stablecoins could strengthen the U.S. dollar’s global role but warns that their success depends on clear regulations and solid business use cases.
During the speech at the San Francisco conference, Waller stressed that the United States should have a clear legal regulation of stablecoins. He proposed to permit both the banks and non-banks to issue regulated stablecoins and that the regulations should enable a stable payments system, according to a Bloomberg report.
However, Waller noted that stablecoins are subject to ‘run risk,’ which implies that issuers need to have sufficient dollars or Treasury bills to support their tokens. He also stressed that the lack of coherent legislation at the state level may become an issue for stablecoins because it can set caps on the expansion of such assets across the United States.
Stablecoins are now regulated by the senators to have one-to-one reserves and must also follow the anti-money laundering laws. However, the House Financial Services Committee has come up with a draft bill to address these issues.
Waller also pointed out the issue of fragmentation of the regulations across the world, which may hamper the expansion of US dollar-backed stablecoins.
Stablecoins are steadily gaining popularity, and the US authorities are under pressure to provide a coherent legal regulation of such assets. Without it, stablecoins may not be able to achieve their potential in both the domestic and international markets.
