The President's Working Group on Financial Markets called for bank-like regulatory oversight of stablecoins in a much-anticipated report.
The report highlights gaps in regulation to reduce risks and calls for several legislative moves.
It calls for Congress to pass legislation requiring stablecoin issuers to be insured depository institutions in order to prevent against a "run on the bank," it calls for legislation to require wallet providers to have federal oversight to address payments risk, and it calls for legislation to make stablecoin issuers comply with rules that limit affiliations with other commercial entities.
In the meantime, it calls for agencies to address some of the risks that stablecoins present to the financial system, including the Financial Stability Oversight Council, such as designating certain stablecoin activities as "systemically important payment, clearing, and settlement activities."
Stablecoins have become a major part of the crypto industry and have been called a potential systemic risk to the broader financial system because of their increasing ties to the traditional financial system.
"The rapid growth of stablecoins increases the urgency of this work. Failure to act risks growth of payment stablecoins without adequate protection for users, the financial system, and the broader economy," the report said.